The ATO has cast a wide net this year as to who they will be targeting for their annual tax return hit list. Every year we find out which profession will be scrutinised by the ATO, however instead of picking particular industries this year the ATO has scoped in any tax payer which submits an electronic device as a deduction.
The use of electronic devices such as mobile phones, computers, and blackberries out of work hours is often reflected in our tax returns, and these devices are becoming a huge part of the $19.5 billion of work related expenses Australians claim each year.
ATO Assistant Commissioner Karen Anstis says, “People are using their computers at home for work-related purposes but it is very important they understand the distinctions between what is work-related and what is personal use”. There is no doubt the tax department will be looking to make this point clear to the tax payer this year.
The ATO has also announced that not only will they cast their net over electronic devices, but also focus on claims around travel expenses and transfer of bulky tools and equipment between home and work. This puts the spot light on tradies and work-related travel expenses.
Generally, if the deduction (eg. Your work ute or van) is both work related and private or domestic, you can only claim for the portion which is work-related. For example car expenses from home to work are not deductable, but between jobs the expenses are deductable.
If you have to carry bulky equipment heavy tools or machinery to and from work which you cannot leave at work (as in the case of most tradies), the travel expense is deductable. Work related travel includes driving between work sites, making deliveries, visiting clients or work sites for inspection, driving errands.
Some more points to remember on your tax return if you are tradie:
- If you have occupation-specific clothing or protective clothing and laundry, this can be claimed. You will need receipts for laundry expenses over $150.
- Be careful with expenses relating to self-education as they are generally not deductable
- Items such as phones, tools, equipment, and computer running costs are deductable
- Union and professional association fees are deductable
- Depending on your employment situation, overtime meals can also be claimed
- Make sure you keep proof of everything you are claiming in case the ATO does ask you to provide it
And watch out for the ATO’s new technologies which “enables us to look at every single tax return” this year, as Anstis has warned.
With regard to insurance and your tax return, you can prepay your income protection insurance in order to bring the deduction forward. This is a common tactic to help you reduce your personal tax bill. Also, make sure you buy private health insurance if you are a high income earner to avoid the Medicare Levy Surcharge. To avoid the charge for a year, you must have held the insurance for a year.
Anstis says her one piece of advice for submitting your tax return this year is “claim the right amount – no more, no less – and evidence to substantiate the claim”. As long as you can provide the receipts or written proof and have kept a good record this year, you will be in the clear.
If you need some more information relating to a specific trade the ATO has more resources here.