ATO's deductions warning


TIP: Check with the ATO before you try to claim thousands of dollars worth of wine as a tax deduction.

TIP: Check with the ATO before you try to claim thousands of dollars worth of wine as a tax deduction.

With more than eight million Australians claiming work-related expenses each year, the Australian Taxation Office has reminded people to get their deductions right this tax time.

While most did the right thing, according to the ATO, individual mistakes added up to a significant amount overall.

The ATO said from time to time people deliberately made incorrect claims, including claims for car expenses where log books had been made up and claims for self-education expenses where invoices were supplied for conferences the taxpayer never attended.

Indeed, deliberately making incorrect claims was an easy way to get into some serious trouble and most definitely not worth it.

And while most tax agents are there to help you do the right thing, sometimes the ATO identifies tax agents offering special deals, inflating claims to generate larger refund, but if it sounds too good to be true, it usually is.

It is a good idea to do your research to make sure your tax agent is registered.

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ATO Assistant Tax Commissioner Graham Whyte said every tax return was scrutinised using increasingly sophisticated tools and data analytics developed by ‘Data Doctors’ at the ATO.

It meant the ATO could identify and review income tax returns that may omit information or contain unreasonable deductions.

“When a red flag is raised, our staff investigates further and if your claims seem unusual we will check them with your employer,” he said.

“If you’ve made a mistake, this will hold up the processing of your tax return, so it’s best to make sure you claim the right deductions from the start.”

Mr Whyte said the ATO had introduced real-time checks of deductions for tax returns completed online.

“If your claims are substantially higher than others in similar occupations, earning similar amounts of income, a message will appear, asking you to check them,” he said.

“If you are doing the right thing you have nothing to worry about. If you make an honest mistake we will help you fix it up and correct your tax return. We will not penalise you if you genuinely tried to get it right.

“But, if you didn’t make a reasonable or genuine attempt to get it right or are intentionally doing the wrong thing, you may receive a penalty.”

Mr Whyte said it was easy to keep on the right track with work-related expense claims by remembering three golden rules.

“One, make sure you spent the money yourself and were not reimbursed,” he said.

“Two, make sure it is related to your job, and not a private expense. Three, keep a record to prove it.

“We’ve got a range of guides including specific occupation guides on our website to help people understand what they can claim. If you use a tax agent, you can also ask them for advice on the right things to claim.

“You can also make it easier on yourself by using the myDeductions tool in the ATO app to record your work-related expenses on the go. You can then upload directly into your next tax return just like your pre-filled information.”

For more information on work-related expenses, visit

Here are some examples of claims the ATO recently knocked back

Example 1: A railway guard claimed $3,700 in work-related car expenses for travel between his home and workplace, indicating the expense related to carrying bulky tools – including large instruction manuals and safety equipment.

His employer advised the equipment could be securely stored on their premises. The taxpayer’s car expense claims were disallowed because the equipment could be stored at work and carrying them was his personal choice, not a requirement of his employer.

Example 2: A wine expert, working at a high end restaurant, took annual leave and went to Europe for a holiday.

He claimed thousands of dollars in airfares, car expenses, accommodation and tour expenses, based on the fact that he visited some wineries. He also claimed over $9,000 for cases of wine.

His deductions were disallowed when the employer confirmed the claims were private in nature.

Example 3: A medical professional made a claim for attending a conference in America. Checks found the taxpayer was still in Australia at the time of the conference. The claims were disallowed and the taxpayer received a substantial penalty.

Example 4: A taxpayer claimed deductions for car expenses using the logbook method.

The ATO found they had recorded kilometres in their log book on days where there was no record of the car travelling on the toll roads. Further inquiries identified the taxpayer was out of the country. The claims were disallowed.