The Australian Taxation Office (ATO) is warning taxpayers to think twice before ‘copying and pasting’ work-related claims from last year’s tax return.
ATO Assistant Commissioner Tim Loh said there are some key changes to look out for this tax time when claiming your deductions.
‘When you’re getting ready to lodge, consider the records you have to support your claims this year – don’t just copy and paste your claims from last year, this will raise a red flag for us,’ Mr Loh said.
Around 8.6 million Australians claimed nearly $21.6 billion in work-related expenses in their 2022 tax returns.
‘We want people to get their deductions right on the first go and claim what they are entitled to – nothing more, nothing less. We have a series of 40 occupation and industry-specific guides which you should have a look at.’
‘Some occupations have expenses that are specific to their occupation. For example, flight attendants can claim rehydrating moisturisers and nurses can claim stethoscopes – our guides can help you get it right,’ Mr Loh said.
To claim a deduction for a work-related expense, remember our 3 golden rules:
- you spent the money yourself and weren’t reimbursed
- it directly relates to earning your income and it isn’t private in nature
- you must have a record to prove it (usually a receipt).
‘If you’re not sure, reach out to a registered tax agent to help you get your tax return right the first time,’ Mr Loh said.
Working from home
Just under 5 million people claimed a working from home related deduction last financial year.
‘We know a lot of Aussies are back in the office or have hybrid arrangements, so it’s important to consider whether your claims reflect your working arrangements this year,’ Mr Loh said.
To claim your working from home expenses, you can use the actual cost, or the revised fixed rate method to calculate your deduction, as long as you meet the eligibility and record keeping requirements.
‘The revised fixed rate method has increased from 52 cents to 67 cents per hour worked from home, and you no longer need to have a separate home office or dedicated work-space – if you are working from the couch, you can still use this method.’
The revised fixed rate covers your costs for electricity, gas, stationery, computer consumables, internet and phone usage. You can claim a separate deduction for those expenses not included in the rate for example, decline in value of depreciating assets, such as computers and office furniture.
To use the revised fixed rate method, you need a record of the total hours worked from home. From 1 March 2023, you are required to keep a full record of the total number of hours you have worked at home. A transitional arrangement is in place prior to 1 March 2023, where we’ll accept a representative record of the hours worked from home.
You will also need evidence of the expenses covered by the rate that you have incurred, for example a monthly or quarterly bill.
‘Keeping the records you need to use this method is really simple – records of hours worked from home can be in any form, for example timesheets, rosters, or a diary of the full year. If you’ve used your phone and electricity when working from home, you just need at least one bill for each of these expenses,’ Mr Loh said.
The ATO is reminding people if you use the revised fixed rate method, make sure you understand what is already included and don’t double dip on your deductions.
Car expenses
Last year nearly 3 million people claimed work-related car expenses, with most people using the cents per kilometre method.
‘Generally, you can claim a deduction for the cost of trips you undertake in performing your work duties, and not for your ordinary commute between home and work,’ Mr Loh said.
This year, if you are eligible to claim work-related car expenses and you use the cents per kilometre method, the rate has increased from 72 cents to 78 cents per kilometre.
The cents per kilometre rate includes decline in value, registration, insurance, maintenance, repairs and fuel costs.
‘The rate is all-inclusive, so be careful not to double dip your deductions by adding these expenses on top of the rate when calculating your deductions,’ Mr Loh said.
You can claim up to 5,000 work related kilometres, per car. You must have written evidence to show how you worked out the work-related kilometres (for example, by keeping diary records of work-related trips).
Self-education
From 1 July 2022, the requirement to exclude the first $250 of certain self-education expenses has been removed. This change applies from the 2022-23 income year onwards.
Our self-education expenses calculator can help calculate your deduction.
