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  • Writer's pictureUHY Haines Norton

Work-from-home claims scrutinised by ATO

By Steve Marsten

Recently the ATO announced that they will be looking carefully at dubious claims for work from home (WFH) expenses. A spokesperson from the ATO suggested that there had been various deductions for biscuits, toilet paper and doggy day care just to name a few of the more ambitious WFH claims that did not pass muster at the ATO.

It is expected that by mid-February the ATO will have processed nearly 11.9 million returns and issued almost 9.5 million refunds at an average of $2,700 each.

The sobering issue is that the ATO was taking a special interest in WFH deductions. The acting assistant ATO commissioner Sylvia Gallagher, advised that with 4.1 million taxpayer claims already exceeded last year’s figure and it is a huge increase on 2019, when there were just 1.4 million. A review is required.

Its accepted and acknowledged that work-related expenses have continued to look different from the pre-COVID period for some time.

Apparently almost one-in-five taxpayers took advantage of the temporary WFH shortcut method to claim deductions, which was introduced as work patterns changed during the pandemic.

This statutory method allowed taxpayers to claim 80¢ an hour WFH expenses and was extended until the end of the 2022 financial year.

Apparently, there is confusion mainly with Do-It-Yourself tax preparers in understanding that if you use the shortcut method you can’t claim anything else. It should also be noted that the WFH claims are the single largest source of deductions and the ATO have advised that they would disallow anything that fell outside the WFH guidelines.

The ATO are struggling with the number of unique claims such as claiming travel expenses and laundry expenses when they’re working from home full time.

Claims for toilet paper, tea, coffee and biscuits because ‘if they’re provided at work then you should be able to have them at home,’ – are unfortunately deemed private expenses. People have also tried to claim for the cost of hotel quarantine, because they have to quarantine, and they have to work.

The more hilarious claims are for Doggy day-care and good pair of old Ugg boots. Another claim ruled out of bounds concerned the cost of setting up children for homeschooling.

The ATO has 3 golden rules when it comes to work related expense claims:

  • The money must have been spent, and not reimbursed.

  • The expense must have been directly related to income.

  • There had to be a receipt.

For up-to-date knowledge about claims that are deductible, feel free to contact the team at UHY Haines Norton on 4972 1300.

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