More scrutiny of car claims

THE Australian Taxation Office (ATO) is making work-related car expenses a key focus again during Tax Time 2019.

This follows warnings by the ATO last year that work-related car expenses would face greater scrutiny.
Assistant Commissioner Karen Foat said that over 3.6 million people made a work-related car expense claim in 2017–18, totalling 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,” she said.
“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.
“Doing the wrong thing is not victimless. When you claim a refund you’re not entitled to, you’re stealing from the whole community and disadvantaging those who do the right thing.”
One in five car claims are exactly at the maximum limit that doesn’t require receipts. Under the cents per kilometre method, taxpayers don’t need to keep receipts, but they do need to be able to demonstrate how they worked out the number of kilometres they travelled for work purposes.
“While some claims of exactly 5,000km are legitimate, we’ve found many people are unable to show how they’ve arrived at this amount and as a result, they’ve had their claim reduced or disallowed in full,” Ms Foat said.
The ATO’s sophisticated analytics compares taxpayer claims with others earning similar amounts in similar jobs. Where the ATO identifies questionable claims we will contact taxpayers and ask them to show how they have calculated their claim. In some cases, where further scrutiny is warranted, the ATO may even contact employers to confirm whether a taxpayer was required to use their own car for work-related travel.
“Simply driving between work and home is not enough to warrant a deduction,” Ms Foat said.
“You must have a work-related need to travel while performing your job, like travelling from site to site or be required to transport bulky tools.”