ATO crackdown targets Australian drivers claiming work-related car expenses this tax return season
The Taxation Office has put hundreds of thousands of Australian drivers on notice, warning it is closely scrutinising work-related car expense claims.
The ATO has emailed a stern warning to more than 500,000 Australian drivers as it cracks down on work-related tax deductions.
ATO assistant commissioner Anita Challen revealed that taxpayers who have previously claimed car expenses were sent the email in a bid to raise awareness of when they “can and can’t” be claimed as a motor vehicle expense.
“We are watching car expense claims more closely than ever and have a strong focus where we think taxpayers might be making incorrect or excessive claims,” Ms Challen said.
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By continuing you agree to our Terms and Privacy Policy.“This includes claiming home-to-work and back travel (which is generally treated as private travel) or common patterns like claiming the maximum 5000 kilometres.”
She explained that the warning about car expenses should be heeded by everyone and not just those who received the email from the tax office.
“Taxpayers who think they’ve overclaimed work-related expenses in previous years need to lodge an amendment or speak to their tax professional and ask them to amend their prior year claims.”
If you are entitled to claim motor vehicle expenses, then you need to be clear on which of the two methods you are using, because car claims rely on set methods and good record keeping.
One option is the logbook method, which allows you to claim the work-related portion of your actual car expenses.
The other option is the cents per kilometre method, which is a fixed rate of 88 cents for every kilometre travelled up to 5000km, meaning a tax deduction of more than $4000 is available.
The cents-per-kilometre method is the most used work-related deduction for car expenses, and has helped boost claims to as much as $12 billion the past fiscal year, Nine reported.
One tax expert said that workers should wait a few weeks before filing their returns.
“The ATO doesn’t start paying refunds until the second week of July,” H&R Block director of tax communications Mark Chapman told News Wire.
“If you’re self lodging, you’re definitely better off waiting until the second half of the month because at that point the significant pre-fill information will largely be complete.”
The ATO collects a range of information to make it easier for people when lodging their taxes including wages, bank interest, government payments and private health insurance details.
Mr Chapman told News Wire that tax returns had likely become more complicated by second sources of income such as side hustles or other forms of investments.
“Everyone’s financial affairs have gotten more complicated. People often have more than one employer; they might have a side hustle or something going on in the gig economy,” he told News Wire.
“Lots of Australians are invested in shares, ETFs or cryptocurrencies.
“At the same time more people are working from home and they therefore need to understand the correct deduction methods.”
