The ATO has advised work-related car expenses will be a key focus again this tax season.
Assistant Commissioner Karen Foat said over 3.6 million people made a work-related car expense claim in the 2017/18 financial year and this amount to more than $7.2 billion:
"We are still concerned that some taxpayers aren’t getting the message that over-claiming will be detected and if it is deliberate, penalties will apply. While some people do make legitimate mistakes, we are concerned that many people are deliberately making dodgy claims in order to get a bigger refund. We see taxpayers claiming for things like private trips, trips they didn’t make, and car expenses their employer paid for or reimbursed them for.”
The ATO has indicated that one in five car claims are exactly at the maximum limit which doesn’t require receipts. Although under the cents per kilometre method taxpayers don't need to keep receipts, they do need to be able to demonstrate how they worked out the number of kilometres they travelled for work purposes.
The ATO uses sophisticated analytics to compare taxpayer claims with others earning similar amounts in similar jobs. When they identify a questionable claim, they contact the taxpayer and ask that they show how the claim was calculated. The ATO may even contact an employer to confirm whether the taxpayer was required to use their own car for work-related travel.
Wondering if you have a genuine claim for work related car expenses? The ATO has provided some case studies of unsupported claims they discovered in the last financial year:
When the ATO asked a taxpayer to provide the logbook to support a claim of $4,800, they found the taxpayer was referring to a car service logbook rather than a logbook kept for calculating their work use car percentage (the taxpayer had not undertaken any work-related car travel during the year).
Another claim was flagged by the ATO's analytics indicating a taxpayer (a retail worker) had incorrectly claimed $350 for the cost of public transport to and from work.
The ATO also identified an office worker claiming $3,300 for 5000 kilometres of work-related travel using the cents per kilometre method, but it turned out the taxpayer's claim was based on trips he made from home to work.
If you're uncertain about whether you are entitled to make a claim for work-related car expenses, get in touch with us and we will help you work it out.