Common Mistakes and Errors in Work-Related Expenses as Tax Time 2024 Approaches

As tax time 2024 approaches, the Australian Taxation Office (ATO) has highlighted some common mistakes and errors related to work-related expenses. In a recent webcast, ATO assistant commissioner Rob Thomson emphasized the importance of understanding the two methods available for claiming working from home deductions.

Thomson explained that individuals can choose between the fixed rate method, which allows for a set amount to be claimed for every hour worked from home, and the actual costs method, which requires keeping records of expenses incurred and the work-related aspect of those expenses.

The ATO increased the fixed rate to 67 cents per hour worked from home for the 2022-23 income year and expanded the types of expenses covered by this method, including internet and telephone expenses. Thomson cautioned against double-dipping and reminded taxpayers to maintain accurate records to support their claims.

For those using the actual costs method, Thomson stressed the importance of documenting expenses and calculating the work-related portion of each expense. He also advised taxpayers to keep detailed records for depreciation on capital assets used for work purposes and for car expenses, especially if using the logbook method.

Thomson also addressed confusion around the fixed rate method, clarifying that individuals must be able to calculate and justify claiming up to 5000 work-related kilometers. He reminded taxpayers using the five cents per kilometer method that it includes maintenance, fuel, and registration costs, and cautioned against claiming these expenses elsewhere in their tax return.

Overall, the ATO is urging taxpayers to maintain accurate records and adhere to the specific requirements of each method when claiming work-related expenses to avoid errors and potential penalties. Stay informed and ensure compliance as tax time approaches.