ATO’s Tax Claim Advice

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The Australian Taxation Office (ATO) is cautioning taxpayers against simply copying and pasting work-related claims from previous tax returns.
ATO Assistant Commissioner Tim Loh highlighted key changes to be aware of when filing deductions this tax season.
According to Loh, it is crucial to consider the records supporting claims for the current year rather than blindly replicating previous claims, as this may raise concerns for the ATO. In the 2022 tax returns, around 8.6 million Australians claimed approximately $21.6 billion in work-related expenses.
Loh emphasized the importance of accuracy and recommended reviewing the ATO’s 40 occupation and industry-specific guides, as certain occupations entail unique expenses. For instance, flight attendants can claim rehydrating moisturizers, while nurses can claim stethoscopes.
To qualify for a deduction on work-related expenses, individuals must adhere to the ATO’s three golden rules:

1) Personally incurred the expenses without reimbursement,
2) Directly related to earning income and not of a private nature, and
3) Supported by records such as receipts.

If unsure, Loh advised seeking assistance from a registered tax agent to ensure an accurate tax return.
Working from home nearly five million people claimed deductions for working from home during the previous financial year.
As many individuals have returned to the office or adopted hybrid work arrangements, Loh stressed the need to align claims with current working arrangements.
To calculate deductions for working-from-home expenses, individuals can utilize either the actual cost or the revised fixed rate method, depending on eligibility and record-keeping requirements. The revised fixed rate has increased from 52 cents to 67 cents per hour worked from home, and it no longer necessitates a separate home office or dedicated workspace.
The revised fixed rate encompasses costs such as electricity, gas, stationery, computer consumables, internet, and phone usage. Separate deductions can be claimed for expenses not covered by the rate, such as the decline in the value of assets like computers and office furniture.
To utilize the revised fixed rate method, individuals need to maintain a record of the total hours worked from home. Starting from March 1 a comprehensive record of total hours worked at home is required. However, a transitional arrangement is in place before that date, accepting a representative record of hours worked from home.
Evidence of incurred expenses covered by the rate, such as monthly or quarterly bills, should also be retained.
Car Expenses In the previous year, nearly 3 million individuals claimed work-related car expenses, mostly utilizing the cents per kilometer method.
Loh clarified that deductions can be claimed for work-related trips, excluding regular commuting between home and work. This year, eligible individuals using the cents per kilometer method will see an increase in the rate from 72 cents to 78 cents per kilometer.
The cents per kilometer rate incorporates a decline in value, registration, insurance, maintenance, repairs, and fuel costs. It is essential not to duplicate deductions by adding these expenses on top of the rate.
Up to 5,000 work-related kilometers per car can be claimed, and written evidence should be provided to support the calculation of work-related kilometers, such as diary records.
Self-Education Starting from July 1, 2022, the requirement to exclude the first $250 of certain self-education expenses has been removed. This change is applicable from the 2022–23 income year onward.

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