The ATO is paying close attention to a few expenses this year. Find out what is attracting the ATO’s attention.

Clothing and laundry claims

The ATO is closely examining claims for work-related clothing and laundry expenses this year.

You can legitimately claim work-related clothing and laundry if you were required to wear either a uniform that is unique and distinct to your employer, protective or occupation specific clothing.

Did you know? 

Last year, around 6 million people claimed work-related clothing and laundry expenses which totalled nearly $1.8 billion. Around a quarter of these clothing and laundry claims were exactly $150, which is the threshold over which taxpayers are required to keep detailed records to support their claims.

 Tip!

• The $150 limit is there to reduce the record-keeping burden and is not an automatic entitlement for everyone.
• The ATO’s technology and access to data is improving every year – be careful about what you claim, and always be ready to substantiate your claims!

Shares and capital gains

The ATO is also paying close attention to taxpayers who have sold or transferred shares and the amount they are reporting as capital gains. Speak to your tax adviser for more information.

Claims for work-related car expenses

The ATO is concerned about taxpayers making mistakes or deliberately lodging false claims in relation to work-related car expenses this tax time.

This year, the ATO will be particularly focused on people claiming things they’re not entitled to. For example, claiming things like home to work travel or other private trips; making claims for trips that they didn’t do or claiming expenses that their employer has already paid for or reimbursed.

Did you know? Last year around 3.5 million people made a work-related car expense claim, and together they totalled about $8.8 billion.

Note!

•  The ATO uses analytics to identify unusual claims being made by taxpayers by comparing them to their peers – those who are in similar occupations, earning similar amounts of income.
• The analytics are also used to identify claim patterns. For example, the ATO were able to identify that over 800,000 people claimed exactly 5,000 kilometres under the cents per kilometre method last year.

Unusual behaviours and characteristics

Broadly, the following behaviours and characteristics may attract the ATO’s attention:

• tax or economic performance is not comparable to similar businesses
• low transparency of your tax affairs
• large, one-off or unusual transactions, including the transfer or shifting of wealth
• aggressive tax planning
• tax outcomes inconsistent with the intent of the tax law
• choosing not to comply or regularly taking controversial interpretations of the law, without engaging with the ATO
• lifestyle not supported by after-tax income
• accessing business assets for tax-free private use
• poor governance and risk-management systems.

Read our complete September 2018 Taxwise Business Newsletter here