The Australian Taxation Office (ATO) has issued a warning to over 500,000 taxpayers concerning the potential misuse of work-related car expense claims. The tax office is increasing its scrutiny on these deductions, particularly focusing on common errors and excessive claims.
Last financial year, Australians claimed nearly $12 billion in work-related car expenses. The ATO offers two primary methods for claiming these costs: the cents-per-kilometre method and the logbook method.
Under the cents-per-kilometre method, taxpayers can claim 88 cents per kilometre for up to 5,000 kilometres of work-related travel, potentially yielding a deduction of $4,400. For those exceeding 5,000 kilometres, the logbook method allows for claims based on the work-related portion of actual vehicle expenses. This method requires maintaining a 12-week logbook and records of all associated costs.
Anita Challen, ATO assistant commissioner, stated that the tax office is paying closer attention to car expense claims than ever before. "We are watching car expense claims more closely than ever and have a strong focus where we think taxpayers might be making incorrect or excessive claims," Challen said. She highlighted common issues such as claiming travel between home and a regular workplace, which is generally considered private travel, or claiming the maximum 5,000 kilometres without sufficient justification.
The ATO requires claims to be for genuine work-related travel, excluding the daily commute. Eligible claims typically include trips between different workplaces, client visits, travel between separate jobs, or attending work-related meetings, conferences, and training.
Taxpayers who believe they may have overclaimed in previous years are advised to lodge an amendment or consult with their tax professional to rectify prior year claims. The ATO's increased vigilance aims to ensure that only legitimate expenses are being claimed and that taxpayers have adequate documentation to support their claims.