Do you claim other work-related expenses such as telephone, stationery, internet and home office costs?
BEWARE - the Australian Taxation Office focus area for the coming financial year will be other work-related expenses!
On 20th February 2018, the ATO assistant commissioner said that 6.7 million taxpayers claimed a record $7.9 billion in other work-related expenses in the 2017 financial year.
Some of you may receive an email from the ATO telling you that they have noticed your other work related expenses are quite high compared to others in the same industry.
Legitimate other work related expenses can include home office, union fees, mobile phone and internet, tools, meals and equipment, but they are only deductible if they meet the ATO’s three golden rules.
Firstly, you must have paid for it and not been reimbursed.
Secondly, it must be directly related to earning your income and not a private expense, and,
Thirdly, you must have records to prove it.
Many of us claim our mobile phone costs for work but did you know if you claim mobile phone costs, and you are asked to prove your deduction, the ATO will ask for:
• A letter from your employer confirming you are required to use your own mobile telephone for work purposes and details of any allowances and/or reimbursements paid, including the name and contact details of the person making that statement.
• An explanation of how you calculated your claim
• Evidence of the total cost of the service for the year of income
• One itemised bill with the outgoing private and outgoing work-related calls clearly and distinctly marked and tallied OR a diary covering a representative four-week period showing the work-related and private use of the service
Do you have all of this information at the ready for a potential ATO audit?
It is now more important than ever to make sure you keep all of your receipts and proof of how it relates to your work.
If you have any questions about what records you need to keep for tax deduction claims please contact us to discuss the record keeping requirements.