Job expenses claims face ATO scrutiny

The West Australian, 6.7.17

The Taxation Commissioner is about to go through the work expense claims of millions of Australians, revealing that half of us claim to wear a uniform or need special equipment to do our job.

Commissioner Chris Jordan said yesterday that there were doubts about more than 10 per cent of the $22 billion in work-related claims Australians made in their tax returns.

And those who own rental properties are also in the gun, with the Australian Taxation Office likely to closely examine the $44 billion in deductions used by landlords to reduce their annual tax bill.

Since the end of the financial year more than 210,000 people have submitted their tax returns to the ATO. Mr Jordan said the tax office believes there was a $2.5 billion “tax gap” in what large businesses pay in tax a year and what the ATO estimates they should pay.

But there is an even bigger tax gap among ordinary working Australians. Mr Jordan said the gap for work-related expenses was at least $2.5 billion, with gaps also in overall deductions, worth $36 billion a year, and in the rental area.

He said there were many incorrect claims being made in areas such as clothing and laundry expenses or the cents a kilometre method of determining car expenses.

In the 2014-15 financial year, about 6.8 million people made clothing expense claims totalling $1.8 billion. “That would mean that almost half of the individual tax-payer populations were required to wear a uniform or protective clothing or had some special requirements for things like sun glasses and hats.” Mr Jordan said.

“While many of these claims would be legitimate, I wonder how many people have assumed that they can just claim $150 regardless of whether or not they have spent that amount on the required items.”

Car expenses will also be targeted, especially where firms make “excessive” claims or make an assumption they do not have to explain vehicle use.

Mr Jordan said while the sums per person were small, the overall level of deductions meant there were large “pots” of money the ATO was required to investigate.

Education, scrutiny and “enforcement” in the area would be ramped up, with Mr Jordan signaling he would ask the Government for tougher laws if necessary.