ATO warning: work-related car expense claims


Do you often claim work-related car expenses as part of your tax returns? If so, it’s important to be aware that the ATO will be paying particular attention to such claims this year.

The ATO said recently that in the 2015/16 financial year, over three million people claimed work-related car expenses, adding up to a total of $8.5 billion.

Kath Anderson, the ATO assistant commissioner, said that a significant proportion of work-related car expense claims were right at the 5,000 km mark – in other words, the limit under which taxpayers are not required to provide detailed records to substantiate their claim.

Ms Anderson noted that while it’s true that taxpayers weren’t required to submit written records, they “do need to be able to show that you were required to use your car for work, and how you calculated your claim.”

She said that while the ATO believes most of these expenses to be legitimate, people should remember that there is no such thing as a ‘free pass’ when it comes to deductions and that the tax office will be paying closer attention to such claims this year.

Focus on ‘common errors’

Ms Anderson spoke about several distinct areas in which ‘common errors’ were made:

  • Claiming trips between home and work for no good reason
  • Carrying bulky tools or equipment to work – “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.”
  • Double-dipping – “You cannot claim expenses that have already been paid by your employer, including salary sacrificing arrangements.”

Rules around work-related expenses

Ms Anderson said there were three rules people needed to keep in mind about work-related expenses:

  1. You must have spent the money yourself and not been reimbursed by your employer
  2. The claim must be directly related to earning your income
  3. You need a record to prove it.

Confused about which work-related expenses are legitimate, and ensuring you have appropriate records? We’re happy to help. Call us on 07 3822 7201 to book an appointment.