The ATO is paying close attention to claims for work-related car expenses this tax time.
Assistant Commissioner, Kath Anderson, said “standard” claims were a common error. “Some people think they are entitled to a “standard deduction” for car expenses, using the cents per kilometre method, but this is not the case. While it is true that you do not need written evidence for claims of up to 5,000 kilometres per year, you do need to be able to show that you were required to use your car for work, and how you calculated your claim,” she said.
Car Expenses incurred in performing your duties as an employee are generally deductible, but taxpayers usually can not claim trips between home and work.
Example: A railway guard claimed deductions for car expenses in travelling to and from work, basing his claim on the fact that he carried bulky tools (including his flag, safety vest, hand held radio, torch, instructions and timetables) in his car. He attracted an audit because his deductions were much higher than those of other people in the same occupation. His employer advised us that secure facilities for equipment were available on the business premises, so transportation of equipment was the employee’s choice. For this reason, expenses in relation to travelling to and from work are not an allowable deduction in this situation and the taxpayer had to pay $2,000 for tax owed plus interest.
For more information please visit the ATO website http://website https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/vehicle-and-travel-expenses/car-expenses/ or contact MRG Redshaw on 07 3221 4004.