Preparing your own tax return might seem to be a cheap way for filing your income tax claims. Tax agents (accountants who have the licence to prepare tax returns) also have a duty of care to prevent you from doing anything stupid as far as the Australia Taxation Office (ATO) is concerned. Note that the data are collected by the ATO and your particular claims are compared to somebody else with a similar income and occupation.
If you are claiming motor vehicle expenses, you simply cannot make things up. You need to have documentary evidence over 12 consecutive weeks or longer or at least a logbook showing the distance travelled. The latter method is for short distances under 5000 km per year. The purpose of the journey must be for work purposes and not simply going to and from work.
However, if you are required (note required) to carry bulky tools such as a painter carrying trestles or a plumber carrying large tools such as compressors, this is a different matter. It is suggested that you complete a logbook stating the date, the distance travelled, and the purpose of the trip. An example whereby a logbook is essential is that of a disability support worker who travels from client to client. The claims will be justified and beneficial to the taxpayer by having those documents and therefore result in a bigger refund or a lesser liability.
Another major area of concern of the ATO is that of claiming the internet and mobile phone expenses for work purposes. The taxpayer is required to maintain a logbook of 4 weeks to indicate the percentage for work related expenses. This is somewhat onerous but essential. The same applies to working from home, particularly during the COVID-19 era, whereby many employees are required to work from home. There are many claims allowable in this situation. As an example, electricity may be claimed along with the internet, mobile phone expenses, and other items such as desks or computer accessories.
The ATO will be scrutinizing these claims rather thoroughly because taxpayers will probably try to claim expenses that they are not really entitled to or they do not have the necessary documentation. Bear in mind that the ATO has very sophisticated software to detect likely fraudulent claims. If you do get a tax audit do not panic all you need to do is to provide the necessary documentation and you will have no problems. However, if you have made fraudulent or what is commonly called “creative accounting” aims, you are very likely to have the ATO applying penalties for falsifying your tax claims.
In summary, it is suggested that you have all the documentation and be very thorough in your record-keeping. Do not falsify your return!
