Claimable Expenses - Beware!
I had a very interesting phone call from a truck driver today, he asked me to complete his 2018 income tax return and he explained to me that a previous tax agent had put him in a serious spot of bother. The previous tax agent had made some over the top claims for the 2016 and 2017 years, which resulted in the driver receiving a refund of approx. $ 18,000.00 for the 2016 year and $12,000.00 for the 2017 year. The driver thought this was pretty good and had a good time in spending the money. However, 6 months down the track the Australian Taxation Office undertook a review and found the claims could not be substantiated and the driver was required to pay back the refunds along with another $ 5,000-00 in fines and penalties, as well as being charged interest at 13%. This will be $ 35,000.00 being paid back. This gets worse as the driver referred a few of his mates to the tax agent and sure enough, they were all audited as well and are in the same situation with fines, penalties and interest.
As I have previously stated it does not matter what you get back in the initial consultation when your tax return is prepared. The real test comes when the Australian Taxation Office decides to undertake a review of your tax return. I asked this poor driver about trying to make a legal claim against the tax agent who prepared the return, the driver believed the tax agent had either left the country or was in jail.
I just want to keep informing drivers that if it sounds too good to be true, it probably is. Your tax agent should be able to stand beside you when you are being audited and should be able to justify everything that has been claimed. If this is not the case – get a new tax agent. If you are charged a fee to get your tax prepared the tax agent should be able to provide you with the confidence that all claims in your tax return are correct. If they are unable to do this, I strongly suggest you steer clear of them as you will end up like the driver I spoke to today and end up paying back a large tax bill to the Australian Taxation Office which will take years.
Meal Expenses – per previous Blogs
Car Expenses – to and from work are claimable providing you are carrying large or bulky equipment that is required for work.
Protective Clothing – It must be used to protect the person or their conventional clothing, i.e. steel cap boots, sunscreen, high vis gear etc, safety gloves, helmets etc.
Compulsory Uniform – The uniform must be unique and particular to an organisation i.e. it must have the company logo – i.e. work jeans are not claimable
Laundry expenses – reasonable claims of $ 150-00 per year without receipts are claimable.
Toll fees – paid while travelling for work are claimable – Fines such as speeding are not claimable.
Stationary (diaries, log books etc) are claimable
Tax Agent Fees - costs of paying an accountant to prepare your tax return are deductible
Telephone Costs – the work-related calls are tax deductible; it is always a good idea to keep a log to confirm the business percentage.
Union and professional association fees are claimable.
Superannuation contributions: Claims allowed in respect of employees. This is new for this financial year – if you make a contribution to superannuation from your net wages you can claim a tax deduction for the 2018 financial year and going forward.
Tools that are less than $ 300-00 can be claimed instantly, tools over $ 300-00 will need to be depreciated over a few years.
Donations over $ 2-00 to “deductible gift recipient” (DGR).