Which deductions and jobs is the ATO double-checking this year?
What's on the tax hit list this time around?
Yes, it's nearly tax return time again. Once 30 June passes, everyone will be looking to get their tax return in as quickly as possible, and hoping for a decent-sized refund. But just how carefully will the Australian Taxation Office (ATO) be checking those returns?
In years past, the ATO has picked out particular occupations (such as salespeople) or particular types of income (such as property investment) and subjected them to extra scrutiny. But in 2018, no specific category has been singled out for extra attention. Instead, the key message from the ATO this year is to make sure you're only claiming deductions against your income that you're entitled to, because data analysis techniques make it easier to identify questionable inclusions.
Tax returns can be analysed in real-time, and compared to other returns from people in similar occupations or with similar incomes. If what you're claiming is massively different to what most people in a similar position claim, you're likely to be a target for further scrutiny.
"Many taxpayers don't have a good understanding of what deductions they can claim, and believe they can claim for items which they in fact can't," ATO assistant commissioner Kath Anderson says. "Some taxpayers even think that you can make a standard claim of $300 without having spent the money. You don't need receipts for claims up to $300 but you must have actually spent the money, and be able to show us how you worked out your deduction if asked."
So how can you be sure your deductions are valid? The ATO says there are three key criteria to consider:
- Firstly, you have to have spent the money yourself, and it can't have been reimbursed. If you've purchased an item for work but then claimed it on expenses from your employer, it can't be claimed as a deduction.
- Secondly, the claim must be directly related to earning your income. If you're studying in an unrelated field, for instance, you can't claim a deduction for self-education expenses.
- Thirdly, you need adequate records to prove what you've spent. Note that these don't have to be paper documents: email receipts or online bank account records can be valid.
Beyond that, the ATO maintains a list of deductions which are allowed for particular occupations. It's worth checking to see if your job is on that list. If it is, make sure you're claiming for any allowed items from the list.
Check out our tax time 2017 guides below, or head to our detailed guides to getting the most from your tax return.