ATO helps to work out work-related expenses

As Tax Time approaches, the ATO is encouraging people to check which work-related expenses they are entitled to claim and understand what records they need to keep. Assistant Commissioner Graham Whyte said people should claim everything they are entitled to – no more, no less.

“We know that the rules around work-related deductions can be confusing but we are here to help people understand them,” Mr Whyte said.

“We have lots of helpful, easy-to-read guidance on our website including videos and guides for common deductions in different occupations.

“Generally speaking, if you claim a deduction you need to remember the three golden rules. One, make sure you spent the money yourself and were not reimbursed. Two, make sure it’s related to your job and three, you need a record to prove it.

“One of the best ways to keep track of your deductions is to use the myDeductions tool in the ATO mobile app. It lets you record work-related deductions on the go, and uploads directly into your next tax return just like your pre-filled information.

Mr Whyte said there has been a change in the rules for calculating car expenses this year and people need to use a logbook or the cents per kilometre method to support their claims.

“It’s important to remember that you can only claim a deduction for work-related car expenses if you use your own car in the course of performing your job as an employee. Most people can’t claim the cost of travel between home and work because this travel is private,” Mr Whyte said.

The ATO will be paying extra attention to people whose deduction claims are higher than expected, in particular those claiming car expenses - including those for transporting bulky tools, and deductions for travel, internet and mobile phone, and self-education.

For the first time ever, this year the ATO will check taxpayers’ deductions in real-time as they complete their online return.

“If your claims are substantially higher than others in similar occupations, earning similar amounts of income, a message will appear, asking you to check them,” Mr Whyte said.

“This new process isn’t about catching you out; it’s about helping you to make sure your claims are correct. The ATO will take a closer look at any unusual deductions and contact employers to validate these claims, so it’s worth getting things right at the start,” he said.

For more information on work related expenses, visit

To watch videos on work related expenses, visit

For handy guides on deductions for specific industries and occupations, visit

Case Studies

Transporting bulky Tools

A car mechanic claimed $3850 in car expenses for carrying their large toolbox to and from work each day. The employer told the ATO that they supply all of the necessary tools at the workshop for the mechanic to do their job but they preferred to use their own tools. The car expenses were disallowed because the mechanic chose to use their own tools, rather than the tools provided by their employer. Travel from home to work is private and not tax deductible. The mechanic was required to pay back more than $2000 in tax and penalties.

Allowance not necessarily giving rise to a deduction

For each day a boilermaker worked away from home, they received a travel allowance from their employer. The boilermaker’s payment summary showed they were paid a travel allowance of $8000 during the year, the same amount that the boilermaker claimed as a deduction.

The employer paid the travel costs to get the boilermaker to and from work and provided accommodation and all meals. The claim for travel expenses was disallowed because the boilermaker did not spend any money. As the travel allowance was shown on the boilermaker’s Payment Summary, it needed to be included as income on their tax return. After penalties were applied, the boilermaker received a bill for almost $4000.

Car and uniform expenses

A real estate agent claimed work-related motor vehicle and work-related clothing, laundry and dry-cleaning expenses. During the audit process he provided allegedly false tax invoices from a commercial car wash and dry cleaner to support his deduction claims. The real estate agent was prosecuted; he pleaded guilty and was fined $4,000.

Mobile phone expenses

A labourer claimed $1,200 in other work-related expenses for use of his mobile phone. The labourer told the ATO they used their phone at work to keep in touch with their co-workers but did not have records to show this usage. When the ATO spoke to the labourer’s employer, they were told the labourer was not required to use their mobile phone as part of their duties. The ATO accepted that the labourer may have occasionally used their mobile phone for work purposes and allowed a claim of $50 for the year.

Self-Education expenses

A retail sales assistant claimed a deduction for self-education expenses of $5,165 for course fees relating to a Bachelor of Arts degree. As the degree did not directly relate to the assistant’s current job, and there was no requirement to undertake further education, the claim was disallowed.

False claims

An insurance broker claimed work-related expenses of over $65,000 in his tax returns. As well as car expenses, he claimed expenses for entertaining clients. When asked to prove his claims, he provided receipts for significantly less than the amounts claimed. Many of the receipts were for meals on weekends and with his family, and personal expenses such as school fees and pool supplies. When the insurance broker’s vehicle logbooks were compared with other data held by the ATO, it became apparent that they were fabricated. The insurance broker’s claims were substantially reduced and he was penalised for making false statements in his returns. He was found liable for tax, penalties and interest of over $75,000.

Last modified: 06 Jun 2016QC 49260