Latest news with #workrelatedexpenses
Yahoo
30-06-2025
- Business
- Yahoo
ATO tax deductions worth $3,518 that millions of Aussies are claiming
The Australian Taxation Office (ATO) has revealed how Australians have claimed $3,518 worth of tax deductions on their returns. Tax time is officially here, and experts are urging people to be aware of everything they can and can't claim. Aussies claimed an average of $2,639 in work-related expenses in their 2022-23 tax returns, according to fresh data released by the tax office. This marked the highest average in at least a decade and was higher than the average amount claimed during the pandemic. More than 10.3 million Australians claimed a work-related deduction throughout the year, out of the 16.1 million individual tax returns that were analysed. This included claims related to working from home. RELATED Major $1,500 ATO warning for Aussies lodging tax returns on July 1 Mortgage warning over July RBA interest rate cut Centrelink age pension alert for Aussies travelling overseas Tax Invest Accounting director Belinda Raso said the data highlighted how vital it was to claim what you were entitled to. 'It is important that you start arming yourself with the information of what you can and can't claim this year,' she said. 'Make sure you are reaching that average of $3,500.'The second most common tax deduction was related to expenses incurred in managing tax affairs, such as engaging a tax accountant to help complete your tax return. More than six million taxpayers claimed an average deduction of $370 on this expense. Deductions for gifts and donations doubled, with more than 4.4 million people claiming an average of $2,032, up from $1,067 for the previous financial year. The biggest tax deduction was personal superannuation contributions, with 679,004 people claiming an average deduction of $17,380. More than 302,000 people claimed deductions for interest charged by the ATO, with an average deduction of $2,362. This is something Aussies can no longer claim. From July 1 this year, interest charged by the ATO for late payments or underpayments will no longer be tax deductible. The change has been brought in to ensure taxpayers who do the right thing and pay their tax in full and on time aren't disadvantaged compared to those who delay payment. ATO assistant commissioner Rob Thomson said work-related expenses would be a key focus of the tax office this year. 'Work-related expenses must have a close connection to your income-earning activities, and you should be prepared to back it up, with records like a receipt or invoice,' he said. 'If your deductions don't pass the 'pub test', it's highly unlikely your claim would meet the ATO's strict criteria.' The ATO will also be taking a close look at working from home deductions, with taxpayers able to use either the fixed rate method or actual cost method to claim. If you're not sure what you can and can't claim, Thomson recommended checking the ATO's website for detailed guidance or asking your registered tax professional. 'Don't just claim it and hope for the best, as penalties and interest may apply,' he said. The ATO has information on specific deductions for different jobs on its website.
News.com.au
30-06-2025
- Business
- News.com.au
If you do this at tax time, you're definitly on the ATO's radar
Tax time is upon us, which means many Aussies are scrambling to get their finances sorted. At-home money managers should note however that the Australian Tax Office (ATO) is unhappy with a $9 billion tax gap and will be zeroing in on some trouble spots. Below are four key areas you need to keep an eye on, or risk an audit from the ATO. Work related expenses Director of tax communications at H&R Block, Mark Chapman says most of the tax gap is people incorrectly claiming work related expenses. 'It's important for tax payers to remember the golden rules – only claim something actually incurred for work purposes, have full substantiation (or evidence), and don't claim anything you were reimbursed for by your employer. 'If you can tick off all of those boxes then you can claim it.' Working from home deductions have also become a minefield because many people don't keep full records or timesheets. 'The ATO is looking at these claims very closely,' Chapman said. 'Unfortunately many don't have substantiation and get their claims knocked down.' Rental property risks After work related expenses, property is seen as the largest contributor to the tax gap. 'The ATO has looked at tax returns from property investors and noted that up to 90 per cent of them are wrong,' Chapman said. 'We don't know if it's a dollar or two incorrect or thousands of dollars. But it does indicate that the ATO is looking closely at people who have a rental property.' Chapman says the pitfall here is people simply not knowing that rental income is taxable and not declaring it. Tax partner at Pitcher Partners in Melbourne, Daniel Burt agrees that rental properties are on the ATO's radar as the risks have increased. The issue of the ATO focusing on holiday homes is not new,' Burt said. 'But what has changed is the prevalence of airbnb and being able to use an online platform to make a second home available for a short period of time. 'The risk may be higher with a less formal arrangement that has less documentation.' To keep things in order, Burt says records need to be kept for the period of rent, income received and for all expenses. 'If the property is not genuinely available to rent for the entire year, the ATO expects some sort of apportionment (division). They're looking to see if it's reasonable based on property use.' Sharing economy and crypto Those moonlighting with Uber, Airtasker or similar should take note – the sharing economy is also setting off alarm bells at the ATO. Chapman says if you work in these areas and don't properly declare your income, you're lining yourself up for an ATO audit. 'The ATO knows who is working in the shared economy and expects to see that disclosed,' he said. Cryptocurrency investors better stay sharp too. 'Similarly, the ATO does have information about who invests through crypto currency exchanges,' Chapman said. Don't disclose and you'll typically get a 'please explain letter' from the ATO, he warns. Another area to check is general investing to see if any of your shares have gone down, which is called an unrealised loss, Burt says. Such a loss can be used to reduce your capital gains. This matters because your net capital gain is added to your taxable income, which is then taxed at the appropriate marginal tax rate. 'So there's an opportunity to sell those shares and generate the loss before the end of the financial year,' Burt said. In short, this means you can offset your gains and losses in the same income year to come to a net amount. Super contributions Burt also recommends people look at their super more closely ahead of tax time. Under current tax rules you can claim up to $30,000 of deductions during the financial year for concessional contributions. This means if an employer puts in $18,000, you can add $12,000 of concessional contributions and claim a tax deduction, says Burt. 'If you have surplus cash from selling some assets or an inheritance, for example, you can reduce your tax liability by making these additional voluntary super contributions,' Burt said. 'But act quickly because we've only got a week before the end of financial year.'
ABC News
26-05-2025
- Automotive
- ABC News
Tax time 2025: ATO warns millions of Aussies claiming work-related tax deductions
Australians are being warned by the Australian Taxation Office (ATO) to stop claiming private expenses as work-related or as donations on their tax returns. About 9 million Australians claimed about $28 billion worth of work-related expenses in their 2023-24 tax returns (as of 31 March 2025), many relating to working from home. The average claim made by taxpayers was about $3,000. But assistant commissioner Rob Thomson says the ATO has recently identified some dodgy claims that the agency has rejected. "We do see some funny claims — we had someone this year who tried to claim their engagement ring as a donation on the tax return," he told ABC News. "We had a company director claim the treadmill, juicer, coffee machine, their gaming console and a bunch of other stuff as working-from-home expenses. "Now on both of those [claims], they're private in nature and you can't claim them on your tax return. "So we are just reminding people that if they are making a work-related expense to follow the three golden rules — you need to have paid for it yourself, it directly needs to relate to the income that you're earning, and that it can't be private in nature." Car expenses: $10.3 billion, 3.6 million Travel expenses: $2.5 billion, 1.5 million Clothing: $2.2 billion, 6.5 million Self-education: $1.8 billion, 1 million Other: $10.8 billion, 7.9 million Total: $27.6 billion, 9.2 million (Source: ATO, data to March 31, 2025) Car-related travel made up the bulk of work-related expense claims. In 2023-24, 3.6 million people claimed about $10.3 billion in car expenses. Mr Thomson says there are two methods that people can use to make car travel claims, but urges people not to "double dip" by claiming the same items. There's the "logbook method", which requires taxpayers to keep a logbook for 12 weeks of the income year, which is a representative sample of their typical work pattern. The logbook method includes a deduction of a percentage of a taxpayer's car expenses, including fuel, maintenance, and registration, unlike the "cents per kilometre" method, which only allows people to claim a set rate. The set rate is 88 cents per kilometre for 2024-25 (in 2023-24 it was 85 cents per kilometre), and allows people to claim a maximum of 5,000 business kilometres per car, per year. Mr Thomson says while the cents per kilometre method doesn't require written evidence to show exactly how many kilometres you travelled, the ATO may still ask people to show how they worked out their business kilometres, for example, via diary records. "Now, that's an all-inclusive method, so that includes all your motor vehicle expenses, including rego and insurance, but what we do see is people still (incorrectly) claiming those expenses separately on the tax return," he said. About 4 million Australians claimed expenses for working from home last financial year. Mr Thomson says there are two methods for claiming expenses related to working from home — the "fixed cost" or "actual cost" method. The fixed-cost method allows people to claim a fixed amount of 70 cents per hour for every hour they work from home in 2024-25. (Note, the rate for the previous financial year was 67 cents per work hour.) The fixed-rate method is not as onerous as it doesn't require people to apportion expenses between private and work. But it restricts them from claiming each expense — such as mobile and internet, or electricity and gas, or home office stationary — separately. Under the actual cost method, taxpayers can claim each expense they have for working from home separately. It may be worth checking with an accountant if it will result in a bigger tax deduction. However, Mr Thomson notes that the actual-cost method is more complicated. He says it requires more detailed record keeping since people need to apportion what's private and what's work-related. In their 2023-24 tax returns, 1.7 million individual investors claimed rental tax deductions. This resulted in an average net rental loss of $1,800 down from an average net gain of $100 the year before. Mr Thomson says common mistakes are people claiming private loans as investment loans. "People will be using a mixed loan — they'll use part of it for their investment property and part for a private purpose, such as going on a holiday (or) buying a car," Mr Thomson said. "We are just reminding people that they can only claim the interest related to the income they generate from the [investment] property. "And they need to do that for the life of the loan, just not once they've paid off the capital that might have related to the car they purchased." He says they've also seen a case of someone trying to claim expenses for a property manager when they didn't use one. "So obviously you have to incur the expense to be able to claim it," he said. About 400,000 people bought or sold cryptocurrencies last financial year. The ATO is currently updating this data. Mr Thomson says many Australians don't keep any records when it comes to cryptocurrencies. "Now for most investors that is a capital gain or a capital loss. "But just a reminder to keep good records both when you're purchasing the crypto and then when you sell it." The ATO continues to use data matching and analytics to catch tax cheats. It uses income data from banks, state revenue offices, land titles offices, motor vehicle registries, insurance companies, share registries, ASIC, PayPal, eBay, Uber, Airbnb and crypto asset exchanges. This information allows the ATO to pre-fill tax returns and ensure taxpayers correctly declare their income. It also allows the agency to identify cases of fraud. In relation to 2024 lodgements, more than 584,000 individual tax returns were adjusted in its data matching programs and advanced analytical models before issuing tax assessments. This includes adding omitted income, removing overstated deductions and tax credits, and correcting apparent discrepancies. Mr Thomson also urges taxpayers not to lodge their returns too early to allow the ATO to get all the information required to pre-fill tax returns.
