Public servants are warned to remember the "golden rules" of claiming deductions this tax time, as the Australian Taxation Office takes a closer look at work-from-home expenses.
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Ensuring taxpayers were correctly claiming work-related expenses would be a focus area for 2024, Tax Office staff were told ahead of lodgement time this year.
Of the 8 million people who claimed a work-related expense in the last financial year, about half claimed a deduction that related to working from home, Commissioner of Taxation Rob Heferen told staff.
"We want people to meet the three golden rules: you must have incurred the expense, it must be related to your work, and you must have a receipt," he said.
Those golden rules will help taxpayers avoid common mistakes, fellow chartered accountant and director at RSM Australia Andrew Fernance said.
Work-from-home expenses in the spotlight
One of the most frequent mistakes Mr Fernance sees is people claiming an entire phone or internet bill.
"Especially with mobile phone and data, people will try to claim their full phone bill rather than the business amount of it," he said.
This is particularly important as the Tax Office takes a closer look at work-from-home expenses, he said.
Those who work from home can either use the actual cost method - which includes calculating the exact expenses you incur and the work-related portion of those expenses - or the fixed-rate method by claiming 67 cents for each hour worked.
"You have to keep really good records," Mr Fernance said.
"There's a lot of public servants that work primarily at home and the ATO is looking at it with a lot more detail in relation to the total number of hours [worked from home]."
Laptop bags and lunch boxes?
Public servants can claim a tax deduction for their work bags - such as a briefcase, laptop bag or satchel - provided it is practical and exclusively used for work, Mr Fernance said.
"For most public servants, that's something that you would carry files and paperwork, your essential laptop," he said.
He noted, however, if you're only carrying around a personal laptop, the bag would not be eligible for a deduction.
![The expenses you can and can't claim this tax time. Pictures Shutterstock The expenses you can and can't claim this tax time. Pictures Shutterstock](/images/transform/v1/crop/frm/146508744/971302d4-5387-4e7a-863b-18f5406f36ea.png/r0_0_1920_1079_w1200_h678_fmax.jpg)
The Tax Office says handbags can only be claimed as a deduction in limited circumstances. For example, if the handbag is exclusively used to carry work items such as a laptop or diary between work meetings and is not used outside work hours, then it may be permitted as a deductible expense.
"But if I wanted a $3000, $4000 Louis Vuitton handbag or something, that would not be [deductible]," Mr Fernance said.
Luggage can also be claimed as a tax deduction if you are required to travel for work.
We know insulated lunch bags and reusable coffees cups are a public servant staple in Canberra. So are those tax deductible?
Unfortunately not, Mr Fernance said.
"Even though you're using it at work, it's not something that you're required to use for work," he said.
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Another significant tax deduction people can claim is motor vehicle expenses, provided transport is not already provided by an employer.
"Travel to and from work is not deductible but travel once you're at work, around work, is," Mr Fernance said.
When to lodge
The Tax Office has also warned taxpayers to wait until late July before lodging their 2023-24 return, to avoid making mistakes.
"We see lots of mistakes where people who rush to lodge early have forgotten to include interest from banks, dividend income, payments from government agencies and private health insurance details," ATO Assistant Commissioner Rob Thomson said.
By late July, taxpayers will have received most of the necessary information from their employer, banks, government agencies and health funds.