Already, just 4 weeks into tax season, some of you may be thinking, “Why is the ATO picking on me?” I know that they tell us every year that they’re going to target work related expenses, but this year, there seems to be some bite to that bark.
The answer partly lies in the massive boost in recent Federal funding to the ATO to assist them to actually make the bite happen. Close to $600 million1 in additional funding in fact. And that funding will need to bring in revenue of a whole lot more to make the expenditure worthwhile.
Where on earth could all that revenue come from? “After all”, you may be thinking, “If I only claim my $150 uniform laundry costs, and not much else, they won’t get rich off me!” True! But just multiply you by 6.3 million2 people! That’s how many individual taxpayers claimed uniform expenses in their 2016/17 tax returns. And the total of all those claims came to $1.8 billion!2. Now, even if all those taxpayers were on the highest marginal rate, the government would only recover $282 million over and above their funding amount. Evidently not a worthwhile spend of $600 million. So it stands to reason that they’ll be targeting other claims as well.
So far, with my own clients, I’ve noticed that the ATO seem to have classified certain taxpayers as ‘high risk’ in this current campaign. It appears to me that they’re targeting those who have claimed the full 5,000km of work related motor vehicle use at item D1 on their tax returns in 2016/17, as well as those who have claimed an amount at item D3 Work Related Uniform deductions. And they’re still testing your level of overall work related deductions against their ‘normal’ range for your occupation code as they do every year.
The ATO don’t know what you & I know: that you really DO use your vehicle a heck of a lot for your employer and that you really DO foot the cost of washing your logo’d uniform every week. But in their eyes, if you can’t prove it you can’t have it. Rather than go into a lengthy discussion of what substantiation is required for a 5,000km claim, or a uniform claim, check out this link. And give me a call if you have any questions.
All the best to you as we ride out this latest ATO audit campaign together!
