ATO warns on ‘copy/pasting’ claims
The Australian Taxation Office (ATO) sights are set on work-related expenses, predicted to decrease in this year’s tax returns.
With COVID-19 modifying people’s work habits, it is expected that work-related expenses will reflect this with a jump in claims anticipated. But if you are working at home, the ATO would not expect to see claims for travelling between worksites, laundering uniforms or business trips.
The ATO’s data analytics will flag unusually high claims, particularly where a claimant’s deductions are much higher compared to others with a similar job and income.
The ATO will also look closely at significant working from home expenses with maintained or increased claims for items like car, travel or clothing expenses.
Claims simply cannot be copied and pasted from the previous year without evidence, however the ATO realises that some unusual claims may be legitimate. If any deduction is supported with evidence, there is nothing to fear.
During 2020, the ATO shifted their focus on getting stimulus benefits out the door as quickly as possible to support businesses in need. In 2021, they will continue to balance their role in supporting taxpayers while recommencing their focus on the overclaiming of work-related expenses.
How COVID-19 has changed work-related expenses
Working from home expenses
The temporary shortcut method for working from home expenses is available for the full 2020-21 financial year. This allows an all-inclusive rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.
Multiply the hours worked at home by 80 cents, keeping a record such as a timesheet, roster or diary entry that shows the hours you worked.
Remember, the shortcut method is temporary. If you want to claim part of an expense over $300 (such as a desk or computer) in future years, you need to keep your receipt.
Personal protective equipment (PPE)
If your specific duties require physical contact or close proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser, or anti-bacterial spray.
This includes industries like healthcare, cleaning, aviation, hair and beauty, retail and hospitality.
To claim your PPE, you’ll need to have purchased the item for use at work, paid for it yourself, and not been reimbursed. You also need a record to support your claim – a receipt is best.
Clothing and laundry, self-education, car and travel expenses
In 2020, there was a decrease in the value of work-related expenses for cars, travel, non-PPE clothing and self-education as a result of the introduction of travel restrictions and limits on the number of people who could gather in groups. This trend is expected to continue in the 2021 tax returns.
If an employee is working from home due to COVID-19, but needs to travel to their regular office sometimes, they cannot claim the cost of travel from home to work as these are still private expenses.
With EOFY fast approaching, it’s best to reach out to us sooner rather than later to talk through deducting your work-related expenses correctly, and any steps you need to be aware of before 30 June. Contact Carrick Aland’s Tax & Accounting specialists in Dalby, Toowoomba or Chinchilla on 07 4669 9800 for specific advice about your circumstances.