Simon’s top 4 Tips to Avoid the ATO’s Wooden Spoon

 

Unless you have been under a rock lately, you would have seen the ATO’s media saturation targeting work related deductions. ATO Commissioner Chris Jordan suggested that overclaiming deductions for work-related expenses may outstrip the cost of multinational tax avoidance stating “the work-related expenses gap is estimated to be greater than the large corporate tax gap of $2.5 billion.”

We have no doubt there will be more audit action than ever before, so please find below my TOP TIPS on making sure you can easily back up any deduction claimed within your personal return.

TIP 1. Download the ATO App
The ATO’s app has a bunch of great features for businesses and super funds but the app also has a cool feature for personal taxpayers. It’s called ‘myDeductions’. ‘myDeductions’ makes it easy to keep your tax deductions all in the one accessible place. Simply download the ATO app to your smart device and you can add:

  • Deductions/expenses
  • Vehicle trips
  • Photos of your invoices and receipts.

So next time you purchase something for the computer you use for work, simply take a photo of the receipt and allocate it to computer expenses.

TIP 2. Keep a logbook
Motor vehicle deductions would be one of the largest source of deductions for individuals, so you can guarantee the ATO will target them. If you’re using the logbook method, best you have a complete logbook ready to go.

The ATO will accept a logbook that has been kept for 12 continuous weeks and shows:

    • when the logbook period begins and ends
    • the car’s odometer readings at the start and end of the logbook period
    • the total number of kilometres travelled in the logbook period
    • the number of kilometres travelled for work activities based on journeys recorded for the period in the logbook. You need to record the start and finishing times and the odometer readings at the start and end of the journey, kilometres travelled, and the reason for the journey
    • the business-use percentage for the logbook period.

Once you have completed a logbook you can use it for up to 5 years, so well worth the effort!

TIP 3. Allocate a private proportion
The ATO hate it when taxpayers claim 100% of things that are clearly also used for private purposes. Things like personal mobile phones, home internet or capital items such as a laptop. Honestly evaluating the level of personal use for these types of deductions might be the difference between the ATO allowing the claim or not.

TIP 4. Beware of data matching
The ATO are receiving more data than ever before. For example, they know how much interest you have earned, if you have sold shares or property or what type of private health cover you have. Recently we have seen ATO action against individuals not declaring income earned from overseas – so be warned – their powers are even stretching beyond our shores.

In conclusion – remember these warnings. Take more care and you should avoid the ATO taking their rather large wooden spoon to the proverbial.

Article written by Simon Byers CPA, Director Highview Accounting & Financial, Prahran.

 

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