The Australian Tax Office has revealed what’s on its hit list this year as we approach tax time, including tax deductions for mobile phone usage and income from rental properties.
The ATO contacts 350,000 Australians each year regarding their tax returns, chasing up omissions or pointing out errors.
In an interview with Fairfax, assistant ATO commissioners Adam Kendrick and Graham Whyte said work-related expenses will be at the ATO’s list of priorities this year.
At the end of every financial year, more than 8.5 million Australians claim $19.7 billion in work-related expenses.
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Of this total, $8 billion is claimed on car travel expenses, with many Australian workers claiming petrol costs for work.
“We will verify with their employer how much the employee uses the car for work, and whether they travel [to their destination] straight from home,” Kendrick said.
This means that small business owners might have to field a few calls from the ATO if any of their employees’s travel cost claims catch the attention of the tax office.
Travel expenses are not the only work-related expense that the ATO will be focusing on this year, with claims for mobile and broadband expenses also likely to attract greater scrutiny.
If employees are using their phones credit or data for personal purposes and claiming it as a work expense, the ATO could soon be knocking on their doors.
Individuals making claims in relation to rental properties should also be prepared, with the tax office signalling rental property-related income and deductions as another priority area.
According to Fairfax, the ATO has contacted more than 100,000 rental property owners in relation to their claims or entitlements during the past year.
“Since 1 July 2014, we have amended over 10,000 assessments relating to income and deduction claims made by rental property owners,” said Whyte.
Tips for small businesses
Chartered Accountant David McKellar, from Allied Business Accountants, told SmartCompany there are a number of key areas small businesses need to watch out for around tax time.
“A big problem I see all the time is unnecessary spending,” McKellar says.
“Don’t go out and spend money just to get a deduction, in reality it’s only going to save you a very small amount.”
McKellar also emphasises the importance of timing when it comes to the end of financial year.
“Any expenses that are coming up, try to bring them forward to this side of the financial year,” he says.
“Its also important to check your super, make sure that small business owners are making contributions.”
McKellar says business owners should be aware of what qualifies as a work-related expense for their employees.
“It’s any expense an employee incurs that relates to their salary and wage income,” McKellar says.
This year the ATO has introduced MyTax as a way for Australians to lodge their own tax forms, replacing the previous e-Tax system.
Despite the ATO’s online systems buckling last year, which lead to backlash on social media, the office has attempted to assure users it is prepared this year.
Whyte told Fairfax the ATO has “invested in preventing the system from collapsing this time”.