The ATO is alerting taxpayers that its sights are set on work-related expenses like car and travel claims that are predicted to decrease in this year’s tax returns.
Assistant Commissioner Tim Loh noted that COVID-19 has changed up people’s work habits,
so the ATO expects their work-related expenses will reflect this.
“We know many people started working from home during COVID-19, so a jump in these
claims is expected,” Mr Loh said.
“But, if you are working at home, we would not expect to see claims for travelling between
worksites, laundering uniforms or business trips.”
Last year, the value of car and travel expenses decreased by nearly 5.5%, but there was
a slight increase of around 2.6% in clothing expenses. With uniform and laundry claims
significantly lower, this increase was driven by frontline workers’ first-time need for things
like hand sanitiser and face masks.
“While it’s good to see most people have been doing the right thing, our data analytics will
be on the lookout for unusually high claims this tax time. Particularly where someone’s
deductions are much higher than others with a similar job and income.”
“We will also look closely at anyone with significant working from home expenses, that
maintains or increases their claims for things like car, travel or clothing expenses.”
“You can’t simply copy and paste previous year’s claims without evidence.”
“But we know some of these unusual claims may be legitimate. So, if you explain your claim
with evidence, you have nothing to fear.”
“We also want to reassure the community that we will be sympathetic to legitimate mistakes
where good faith efforts have been made. However, where we spot people deliberately
claiming things they’re not entitled to, we will take firm action,” Mr Loh said.
During 2020, the ATO had to shift focus on getting stimulus benefits out the door as quickly
as possible to support so many businesses in need.
In 2021, the ATO will be continuing to balance its role in supporting taxpayers through this
very challenging time, while recommencing its focus on addressing overclaiming of work-related expenses.
How COVID-19 has changed work-related expenses
Working from home expenses
The temporary shortcut method for working from home expenses is available for the full
2020/21 financial year. This allows an all-inclusive rate of 80 cents per hour for every hour
people work from home, rather than needing to separately calculate costs for specific
All taxpayers need to do is multiply the hours worked at home by 80 cents, keeping a record
such as a timesheet, roster or diary entry that shows the hours they worked.
Note that the shortcut method is temporary. If a taxpayer wants to claim part of an expense
over $300 (such as a desk or computer) in future years, they need to keep their receipt.
Personal protective equipment (‘PPE’)
If an employee’s specific duties require physical contact or close proximity to customers
or clients, or their job involves cleaning premises, they may be able to claim items such as
gloves, face masks, sanitiser, or anti-bacterial spray.
This includes industries like healthcare, cleaning, aviation, hair and beauty, retail and hospitality.
To claim their PPE, they will need to have purchased the item for use at work, paid for it
themselves, and not been reimbursed. The employee will also need a record to support the
claim (e.g., a receipt).
Clothing and laundry, self-education, car and travel expenses
In 2020, the ATO saw a decrease in the value of work-related expenses for cars, travel, nonPPE clothing and self-education as a result of the introduction of travel restrictions and limits
on the number of people who could gather in groups. The ATO expects this trend to continue
in the 2021 tax returns.
If an employee is working from home due to COVID-19, but needs to travel to their regular
office sometimes, they cannot claim the cost of travel from home to work, as these are still
Case study — overclaiming work-related expenses
A Canberra administrative worker fraudulently received nearly $7,000 in refunds after
claiming work-related car, travel, clothing and self-education expenses he wasn’t entitled to.
He had his fraudulent claims knocked back in 2014, after he couldn’t provide any receipts,
instructing the ATO to “just process the return”. He tried it again in his 2015 and 2016 returns,
this time providing a fake letter from his employer.
Given the brazen and repetitive nature of the fraud, the taxpayer was prosecuted and now
has a criminal record. He was also fined $1,800.
To help people find out what they can and can’t claim, the ATO has created nearly 40
occupation and industry guides. They have added three new guides this year for gaming
attendants, community support workers and recruitment consultants.
Ref: ATO media release, 20 May 2021