ATO targets work-related deductions in lead up to June 30

The Australian Tax Office will target earthmovers, flight attendants, real estate agents and construction workers when they review around eight million Australian’s work-related expenses this year.

Tax Commissioner, Michael D’Ascenzo recommends people who fall under these categories pay particular care when lodging their expense claims.

“We have found people in these industries are at higher risk of getting their work-related expense claims wrong due to the types of deductions they are entitled to such as motor vehicle and travel expenses,” D’Ascenzo says in a statement on the ATO website.

“In the lead up to July 1 we are writing to around 116,000 people employed in these industries about assistance that is available from the ATO, including new guides developed specifically for these occupations to ensure they get their claims right this time.”

Common mistakes made by people in these occupations include not having documentation to support transport and travel expenses and incorrectly claiming mobile phone and internet expenses.

Paul Drum from CPA Australia says every year the ATO targets certain industries based on information in their database.

“If they see a trend where expenses are increasing exponentially compared to other industries, it will send up a red flag and prompt further investigation,” Drum told SmartCompany this morning.

“One industry that bobs up regularly is building and construction. A lot of trades-people have their own commercial vehicles and are lumping heavy materials around. There are specific rules on travel expenses and it is always a contentious area.”

Drum told SmartCompany he expects more industries to be targeted when the annual Compliance Program for 2011-12 is released by the tax commissioner in August.

Tax Counsel for the Institute of Chartered Accountants in Australia, Yasser El-Ansary, advises people to keep all necessary documents.

“The best rule of thumb is that if there is a connection between the costs that you have incurred and your derivation of your earning of accessible income, then your safest bet is to keep the receipts and documents together,” he told StartupSmart this morning.

“When you get to year end, whether you are using the services of a registered tax agent or not, to then sift through each of those expenses and make the decision based on whether or not you’re eligible for the deduction on the basis of all the different guides and products available through the Tax Office website.”

El Ansary says if information on the Tax Office website is insufficient, people should either call the Tax Office for advice or use a registered tax agent.

D’Ascenzo also advises people to have their tax records ready by July 1 to avoid the October rush before the October 31 deadline.

Occupation guides and further information on how to lodge your work-related expenses can be found on the ATO website.