Here are three rules to remember when claiming car expenses for this year’s tax return, as the tax office warns work related car expenses will be under scrutiny. Read more
ATO is making work-related car expenses in 2019 a key focus again this year. It had warned last year that work-related car expenses would face greater scrutiny as some taxpayers make dodgy claims in order to receive larger refunds. There are three rules for taxpayers to remember when claiming car expenses:
- Generally, trips between home and work cannot be claimed, unless the taxpayer is required to transport bulky equipment;
- Expenses paid for, or reimbursed by employer, cannot be claimed; and
- Adequate records must be maintained to prove how you arrived at the claim amount.
When using the cents per kilometre method, taxpayers do not 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.
Over-claiming and being unable to demonstrate how the claim was worked out would lead to claims being reduced or disallowed and for penalties in cases where wrongful claims were made deliberately.
The ATO’s sophisticated analytics compares a taxpayer’s claims with others earning similar amounts in similar jobs. Where the ATO identifies questionable claims, they will contact taxpayers and ask them to show how they have calculated their claim. They will also contact employers to confirm whether a taxpayer was required to use their own car for work-related travel.
Source: ATO media release, 25 June 2019.