The Australian Taxation Office’s (ATO) ability to check work related expense claims (including incorrect and unusually high claims) has become more sophisticated through the use of technology and data analysis which increases its audit coverage of individual taxpayers. This is predominantly through the ATO’s data matching programs (for example matching data from state titles offices to capital gains declared in tax returns).
In identifying higher than expected work-related expense claims, the ATO will be comparing a taxpayer’s claims on the return against claims made by taxpayers in similar circumstances (i.e., taxpayers working in a similar occupation and earning a similar level of salary income).
Where the ATO identifies that a taxpayer’s work-related expense claims are unusually high, the ATO may contact the taxpayer’s employer to obtain more information about the taxpayer’s circumstances, including:
- any allowances paid by the employer to the employee;
- the nature of the employee’s duties relative to their claim;
- whether the employee was required to undertake any travel in relation to their work; and
- whether the employee was reimbursed by their employer for the relevant expenses.
Where information provided by an employer indicates that a taxpayer’s claims were incorrect, the taxpayer’s claims will be further investigated and adjustments potentially made. So it’s important to make sure that all claims are reasonable, but it’s equally as important that all legitimate claims are made and that supporting evidence is available to support your claims.
Author: Shaun Coelho