Please read this document in preparation for your appointment to prepare your Income Tax Return. If you are having an appointment via Zoom or phone, please email all receipts to email@example.com a minimum of 2 days prior to your appointment.
I need to see evidence as listed out below. This needs to supplied at your appointment either in paper form or supplied electronically. If you have no evidence, I will not be claiming anything on your tax return. It sounds harsh but these rules have been in place for years but now the ATO has the funds to make sure everyone is doing the right thing.
BTW there is no such thing as a standard deduction. You are exempt from providing receipts for deductions under $300 in total, but you must have spent the money in order to claim.
The ATO’s system gets more complicated and intelligent every single year. I advise all clients to be conservative in their estimates in work related use.
If you also have a rental property, please read this article as well https://aktaxservices.com.au/2019/06/30/rental-properties-records-need-bring/
Records for claiming work-related expenses
When completing your tax return, you’re entitled to claim deductions for some expenses, most of which are directly related to earning your income.
To successfully claim a deduction for work-related expenses, it’s important that you must have spent the money yourself and weren’t reimbursed, it must be directly related to earning your income, and importantly you must have a record to prove it.
You can only claim the work-related part of expenses. If an expense relates to both work and personal use, the ATO will expect that you apportion use on a reasonable basis and only claim the work-related portion.
Keeping your records
You need to keep your records for five years from the date you lodge your tax return.
As the ATO may ask that you produce your records during the five years, it is important that you have sufficient evidence to support your claims.
Note that if you paid cash to a supplier and have no other documentation to support your claim, you will not have sufficient evidence to claim a deduction.
How the record-keeping rules apply to different expenses
The type of car expense records you need to keep depends on whether you use the cents per kilometre method or logbook method to record the expenses.
Method 1: Cents per kilometre
You don’t need receipts, but you need to be able to show how you worked out your business kilometres (for example, by producing diary records of your work-related trips).
If you use the cents per kilometre method, your claim is based on a set rate (68c per kilometre from 1 July 2018) for each business kilometre travelled. You can claim a maximum of 5,000 kilometres per car.
Method 2: Logbook
Your claim must be based on the percentage of work use of your car. To work this out you need to keep a logbook. Your logbook is valid for five years, but you can start a new one at any time. Your logbook must:
- cover a minimum continuous period of 12 weeks and be broadly representative of your travel throughout the year
- include the purpose of every journey, odometer reading at the start and end of each journey and total kilometres travelled during the period
- include odometer readings at the start and end of each income year.
You can claim fuel and oil costs based on your actual receipts, or you can estimate the expenses based on odometer readings from the start and the end of the period in which you used the car during the year.
You must keep:
- original receipts for all other expenses for the car
- details of how you calculated your claim for the decline in value for your car, including the effective life and the method used.
If your claim relates to the transport of bulky tools and equipment, you will need:
- a record of all work items carried
- the weight and size of all work items
- evidence that the items carried are essential to your work
- evidence that your employer-provided no secure storage at the workplace.
Note: If you borrowed a car or used a vehicle other than a car (for example, a motor cycle or a vehicle with a carrying capacity over one tonne, such as a utility truck or panel van) you cannot claim your expenses using either of the two methods.
Instead, you need to keep all your receipts (such as fuel and repairs) and claim the work-related portion of these costs as a travel expense, not a car expense. Also, remember to include on your tax return any allowances that you receive from your employer for car expenses.
There are specific record-keeping requirements for travel expenses, depending on:
- whether your travel allowance is shown on your payment summary
- whether your travel was domestic or overseas
- the length of your travel and your occupation.
Travel records you should keep include:
- a travel diary or itinerary, if your travel was for six nights or more
- receipts for all meals, airfares, accommodation, car parking and tolls
- an explanation of how the travel was work-related, the number of nights you slept away from home and the location.
If your travel allowance is shown on your payment summary and you want to make a claim against it, you must have written evidence for the whole amount, not just the excess over the reasonable amount.
Note: Reasonable amounts for accommodation, meals and incidentals are provided to make record-keeping simpler, not to provide an automatic deduction – you can only claim the amount you spent. Although you may not need records, you will still need to be able to explain how you calculated your claim.
Clothing, laundry and dry‑cleaning expenses
Clothing. You need to keep receipts to claim for the purchase of occupation-specific clothing, protective clothing, or unique and distinctive uniforms.
Laundry. To claim a deduction for laundering occupation-specific clothing, protective clothing or unique and distinctive uniforms, you must keep details of how you calculated your claim.
Dry-cleaning. If you use a dry-cleaning service for the clothes, you need to keep receipts.
Phone and internet
Claiming less than $50. If the work use of your phone is incidental, and you are not claiming a deduction of more than $50, you may make a claim based on the following:
- $0.25 for each work call made from your landline
- $0.75 for each work call made from your mobile
- $0.10 for each text message sent from your mobile.
Claiming more than $50. To claim a deduction of more than $50 you must:
- keep all your phone and internet bills for the year
- show how much is related to work.
If your bills are itemized. Highlight all your work-related calls in a four-week period, which can then be applied to the full period.
If your bills are not itemized or only part of the service is itemized. Keep a diary covering a representative four-week period showing how often you used your phone and internet for work. This pattern of work use can then be applied to the full period.
Bundled plans. If you have a bundled plan, keep a diary covering a representative four-week period showing how often you use each service for work. This pattern of work use can then be applied to the full period. Work out your work use by recording:
- the amount of data downloaded for work as a percentage of the total data downloaded by all members of your household
- the number of work calls made as a percentage of total calls
- the amount of time spent on work calls as a percentage of your total calls.
Note: Unless you only use your phone and/or internet for work, you will have to determine the work-related portion of your expenses. Keep a record of the calculation and only claim that amount.
Working from home
When claiming running costs for your home office (such as electricity and home office equipment) the types of records you need to keep depends on the method you use to work out your claim – fixed-rate or actual costs.
Fixed-rate. If you are using the fixed-rate method (52c per hour from 1 July 2018), either keep records of your actual hours spent working at home for the year, or keep a diary for a representative four-week period to show your usual pattern of working at home.
Actual costs. If you are claiming the actual costs you have incurred, keep your receipts for items you will claim outright (for example, receipts for stationery or statements for electricity and gas).
New Covid mobile/internet/home office claim
The ATO has announced that there is a simpler method for claiming Mobile/Internet/Home Office expenses if you were required to work from home, due to Covid-19.
From 1st March, we are able to claim 80c per hour, and this covers Mobile/Internet/Home Office. You must supply me with information regarding the hours worked from home due to Covid.
You must keep receipts for all self-education expenses, including course fees, textbooks, stationery and travel expenses. You must also be able to explain how the course directly related to your employment at the time of study.
If you are claiming the portion of a depreciating asset that you have used for self-education (such as a laptop), you must keep receipts and a depreciation schedule, or details of how you calculated your claim for the decline in value.