Think twice before claiming your laundry as a tax deduction
The ATO is cracking down on Australians who claim dodgy expenses as tax deductions this financial year.
If you’re planning to sneakily claim your car or laundry expenses as a tax deduction this year you may want to think again unless, of course, the claims are genuine.
Last night tax commissioner Chris Jordan warned Australians the Australian Tax Office (ATO) would be focussing on individuals and small business owners this financial year, to crack down on those who are claiming dodgy expenses.
In a speech to the National Press Club in Canberra, Jordan said the ATO was shifting its focus from big business to individual taxpayers after the ATO revealed the amount individuals failed to pay was in line with the $2.5 billion owed by large companies.
Through it’s random audit the ATO discovered, “there was a significant element of overclaiming.” Jordan said the ATO wants to target taxpayers with attitudes like: “Everyone cheats a bit, so I can too” and “others won’t care if I cheat.”
Jordan justified the shift in focus from big business to individuals by saying that while the amounts individuals were overclaiming for work-related expenses were quite small, together they add up to a significant amount.
"There are likely to be bigger gaps in each of those markets [individuals and small business owners] than in the large market,” he said.
For example, people who claimed their car as a work-related expense, despite having no formal requirement from their employer to use a car for work, would be targeted. Another expense Jordan cited as an issue was clothing. Over 6.3 million claims were lodged for clothing expenses including laundry costs, equaling more than $1.8 billion.
“That would mean that almost half of the individual taxpayer population was required to wear a uniform or protective clothing or had some special requirements for things like sunglasses and hats,” said Jordan.
He acknowledged that many of these errors could be due to honest mistakes and a lack of understanding as to what you legitimately can and cannot claim.
“This is well and truly in our sights and we will be lifting our education, our support, our attention, our scrutiny and enforcement in this area. We will also work with Treasury and government if we feel there needs to be policy change,” said Jordan.
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How much would I have to borrow if I wanted to negative gear a property to save $30000 of PAYG TAX.
Thanks.
Hello,
Thank you for your inquiry today.
Your question requires more data such as rental income, property value, operating expenses, estimated rental growth, and annual taxable income aside from this property.
If you are uncertain how to go about the computation, you may look for an online calculator to give you an estimate or contact a tax accountant.
Hope this helps.
Cheers,
Jonathan