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Australia To Scrutinize Company Vehicle Tax Claims

by Mary Swire, Tax-News.com, Hong Kong

03 May 2018


The Australian Taxation Office (ATO) has said that it will be examining claims for car expenses this tax time as part of a broader focus on work-related expenses.

More than three and a quarter million people made a work-related car expense claim in 2016-17, with claims totalling around AUD8.8bn (USD6.6bn).

Assistant Commissioner Kath Anderson said: "While most people want to do the right thing, we know the rules can be a bit tricky for some and we are seeing a lot of mistakes. We are particularly concerned about taxpayers claiming for things they are not entitled to, like private trips, trips they didn't make, and car expenses that their employer paid or reimbursed."

There are two ways to calculate a deduction for car expenses. A taxpayer can use a cents per kilometre method, which is limited for work-related travel up to 5,000 kilometres, or they can use a log book to determine the work-related percentage of actual expenses incurred.

Anderson said that the ATO is concerned that some taxpayers believe that 5,000 kilometres is "a 'standard' deduction they are entitled to, without needing to provide any evidence of having travelled that distance, or even having taken any travel at all."

She explained that while claims of up to 5,000 kilometres using the cents per kilometre method do not require a log book, taxpayers must still have done the travel as part of their job and show how they calculated their claim.

According to Anderson, the ATO compares taxpayers to others in similar occupations earning similar incomes, to identify people making false or incorrect claims.

TAGS: compliance | tax | tax compliance | revenue guidance | Australia | tax authority | tax breaks | individual income tax

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