ATO Assistant Commissioner Kath Anderson, said taxpayers often trip up making claims they can’t justify, believing they are entitled to make a “standard” claim.

Some people think they are entitled to a ‘standard deduction’ for car expenses, using the cents per kilometre method, but this is not the case. While it’s true that you don’t need written evidence for claims of up to 5000 kilometres per year, you do need to be able to show that you were required to use your car for work, and how you calculated your claim.

While we have no issue with people using the cents per kilometre method and we expect that most claims at this threshold may be legitimate, but we are reminding people that there’s no such thing as a ‘free pass’ when it comes to deductions.

Car expenses incurred performing work duties are generally deductible, but trips between home and work cannot be claimed without a good reason, such as carrying bulky goods or equipment. If you make a claim for transporting bulky tools, you need to be able to prove you were required by your employer to take these items to work, and that there was no safe place to store them. For more details see the ATO media release Car Claims in the Crosshairs.

Things you probably can’t claim

  • Trips between home and work – unless carrying bulky work-related goods
  • Car expenses that have been salary sacrificed
  • Meal expenses for travel unless you were required to work away from home overnight.
  • Private travel or private transport of bulky goods or equipment
  • Everyday clothes to wear to work – such as a suit or black pants – even if your employer requires you to wear them
  • Deductions for cleaning eligible work clothes without showing how you calculated the cost
  • Higher education contributions charged through the HELP scheme
  • Self-education expenses if the study is not connected with your current job
  • Private use of phone or internet
  • Upfront deductions for tools and equipment costing more than $300 each. These must be depreciated over time

Travel expenses

Travel expenses you may be able to claim include:

  • travel expenses you incurred for meals, accommodation and incidentals while away overnight for work, such as going to an interstate work conference (generally, you can’t claim for meals if your travel did not involve an overnight stay and if the amount was reimbursed by your employer).
  • the costs you actually incur (such as fuel costs) when using a borrowed car or a vehicle other than a car for work purposes
  • air, bus, train, tram and taxi fares
  • Car-hire fees

If you are paid a travel allowance:

  • You must declare the allowance on your tax return as income
  • You are entitled to claim a deduction for the actual expenses you incur, less any private component

To claim meal, accommodation and incidental expenses you incurred when you travelled away overnight for work:

  • The travel must be undertaken in performing your work duties
  • You must only be working away from home for a relatively short period or periods of time (not living away from home)
  • You must not have incurred the expenses because of a choice you made about where to live
  • You must have a permanent home at a location away from the work location to which you are travelling
  • You must have paid the expenses yourself and not have been reimbursed for them.

If you travel for six or more nights in a row, you may need to keep a travel diary in which you record the dates, places, times and duration of your activities and travel. The purpose of a travel diary is to allow accurate calculation of the employment-related and private elements of your trip. If the travel was partly private, you can claim only the work-related part.

If you have any questions about any of these opportunities, please contact me.