The Australian Tax Office (ATO) has given a warning to taxpayers who choose to “copy-paste” work related expense claims, like those accumulated when travelling between work sites, or laundering uniforms, while they have been working from home. 

Although the majority of Australians are doing the right thing, the ATO has reassured tax payers that the tax agents data analytics will be on the lookout for any unusually high claims that are made at tax time. 

The ATO is especially wanting to crackdown on instances where a person’s tax deductions are much higher than other workers who are in a similar job that pays a similar amount of income. The ATO also plans to look closely at anyone who has significant working-from-home expenses that maintains or increases their claims for things like car, travel or clothing expenses.  

You cannot simply copy and paste previous year’s claims without evidence. However, the ATO is aware that some of these unusual claims may be legitimate. So, if you explain your claim with evidence, you have nothing to fear. 

According to the ATO, close to 8.5 million Australians claimed nearly $19.4 billion in work-related expenses for the 2020 income year.  

The ATO pointed to 2020 data that showed the value of car and travel expenses decreased by nearly 5.5 percent, while the value of clothing expense claims saw an increase of about 2.6 per cent, as frontline workers were faced with “first-time” expenses for items like face masks and sanitiser. 

The pandemic forced swathes of the workforce to work from home, work-related expenses are expected to spike for the 2021 income year. Despite this, taxpayers should be aware that some expenses, like travel, might not be eligible.  

The ATO is aware that many people started working from home during COVID-19, so a jump in these claims is expected. However, if you are working at home, we would not expect to see claims for travelling between work sites, laundering uniforms or business trips. 

The ATO would also like to reassure the community that we will be sympathetic to legitimate mistakes where good-faith efforts have been made. However, where we spot people deliberately claiming things they’re not entitled to, we will take firm action. 

For taxpayers whose jobs require them to come into physical contact or close proximity to customers or clients, items like gloves, face masks, sanitiser and anti-bacterial spray may be claimed as work-related expenses. 

To ease the burden on Australian taxpayers who are working from home the Australian government has extended the 80 cents per hour shortcut deduction method. This incentive originally introduced in April 2020 will now be in place until 30th June 2021.

Under this arrangement, taxpayers are allowed to claim a rate of 80 cents per hour for all their running expenses, as opposed to having to calculate costs for specific running expenses. The original requirement of having a dedicated work-from-home area is also removed. Under this scheme multiple people in a household are allowed to claim the 80 cents per hour rate.

Tax agents or self-lodgers must include the “Covid-hourly rate” in their annual tax returns if they choose to nominate to use this method. If choosing to use this shortcut method, all an individual has to do is keep a record of the hours they have worked from home as evidence when making a claim.

A significant number of Australian business owners and employees are working from home as a result of the covid-19 pandemic. A direct consequence of working from home is that additional expenses are accumulated by workers in relation to their income-producing activities.

These additional expenses include more money spent on lighting, heating, clean and cooling. Working from home also means that more money is spent on electricity used to operate electronic items. Phone bills increase, internet expenses surge and there is also a decline in the value of furniture and computers that are used for employment purposes.

Leave a Reply

Your email address will not be published. Required fields are marked *