Are you keeping the right documents for your tax return?

The ATO have flagged in recent weeks the areas they will be targeting for the 2018 tax year and beyond. Their major focus area this year is work-related claims, including travel and motor vehicle expenses.

As such, there are certain documents and records you will need to retain as substantiation of any claims made in your return. That way, if the ATO question any claims made, you can provide the appropriate documentation to support your claim.

You must have written evidence of expenses you are intending to claim if the total claim exceeds $300. This doesn’t automatically mean that you can claim a deduction up to $300, it just means that you don’t necessarily need to provide written evidence. You still need to show that the expense has been incurred and that it relates to the income you have earnt.

There are specific requirements for documentation and records to keep for claims associated with work related expenses such as travel and motor vehicles as well as self education costs.

Travel and motor vehicle expense claims

For travel expenses, it is important to keep receipts for any fares, accommodation, food, drink and incidentals incurred. If you a traveling for 6 nights or more you will need to keep a travel diary which records the dates, places, times and duration of your activities and travel. You need this to calculate what proportion of your travel is work related and what is private. You can only claim the work-related part of your travel as a deduction, not the private travel!

Motor vehicle expenses can be claimed using either the cents per kilometre method or the log book method. As the name suggest, the log book method requires you to maintain a log book over a continuous period of 12 weeks to determine the percentage of work related travel. This is valid for 5 years and you will need to record the odometer readings in the following years. To claim fuel & oil, repairs, services, interest on a car loan, lease payments, insurance and registration associated with the use of your vehicle you must keep the receipts.

Education expense claims

To claim a deduction for self education expenses, you must be able to demonstrate that your self education costs relate to your current employment activities. In some circumstances your claim will be reduced by $250 depending on the type of expenses you are looking to claim. Self education costs can include course fees, text books, stationery and you will need to retain the receipts to support your claim. Unfortunately, you can’t claim a deduction for repayments made to your Higher Education Loan Programs (HELP), Student Financial Supplement Scheme (SFSS), Student Start-up Loans (SSL) or Trade Support Loan Program (TSL).

What other expenses can I claim?

Other deductions you may consider claiming for and therefore, will need to be able to substantiate, include:

• Mobile phone, internet & home phone expenses – there are 2 methods
  • Incidental use – where your claim will be under $50. The deduction can be calculated based on the number of calls for the following;
    • $0.25 per work calls made from your landline
    • $0.75 per work calls made from your mobile
    • $0.10 per work related text messages sent from your mobile
    • Total work-related internet data used divided by the total internet data used.
  • Usage is itemised on your bill – if you intend to claim a deduction for more than $50, you can determine a percentage of your work-related calls over a 4-week period each year. You will need to be able to demonstrate this via diary entries and or identifying call/internet usage on your invoices/bills for this representative period.
• Clothing, Laundry & Dry-Cleaning expenses – you can claim a deduction on the cost of buying and cleaning occupation-specific clothing, protective clothing and uniforms. You can’t claim on clothing that is not branded, such as a suit. You will need to retain the receipts or have a diary of written evidence detailing your cleaning costs to claim a deduction if your claim is greater than $150 and your total work-related expense claim exceeds $300.

If you don’t provide written evidence for your laundry expenses, you must use a reasonable basis to work out your claim by either;

• $1 per load (including washing, drying & ironing) if the load is solely work-related clothing, or
• $0.50 per load if other laundry is included.

With the ATO crackdown, it is important to ensure that you have the appropriate documentation to substantiate your claims. We will guide you through the process when tax time comes, but make sure you are keeping the right documentation throughout the year to maximise your return.

Naomi Norman
Manager