ATO announced that the time has come for a strict tax trial!
Have you or your accountant received a warning letter from ATO indicating that the amount of work-related expenses you reported last year exceeded the industry average?
So, as a taxpayer, what should be done to avoid being invited by the IRS to have coffee?
As a professional, we remind you:
- The reported tax credits must have been actually expended and have not been reimbursed by the employer;
- It is not possible to declare deductions because others have said or are generally believed to be deductible in the industry;
- There must be a close link between the reported tax credits and taxable income;
- Support for reporting credits with relevant entity evidence-including bank transfer records, official invoices (including electronic version)
Please be sure to declare deductible expenses in accordance with the provisions of the ATO. Here are some of the review requirements of ATO in respect of several common costs:
Declaration of vehicle cost
If you need to use your private car in your job, you can declare a tax cut on this part of the fee.
According to the provisions of the ATO, the use of a vehicle for work is defined as:
You drive directly between two different workplaces because you have two different employers (for example, you have a second job)
For work-related purposes, you go from your day-to-day workplace to your non-everyday workplace, and then go back to your daily workplace or go straight home.
Tax credits are also available for driving costs between home and workplace if:
You must carry at least 20 kg of large tools or equipment (for example, marine scuba diving equipment) and there is no safe area in the workplace to store the tool or equipment
Your home is considered a work base, and you can
- Start working from home, then move directly to another work base and continue working
- Go home from another work base and continue to work.
- You go from home to another workplace for some work, which is not a regular workplace; then move to a regular workplace or go straight home (for example, attend a meeting at police headquarters before you go to a police station where you usually work).
Confirm your declaration-ATO requirement
After tax reform in 2015, there are only two ways to apply for tax credits for their own vehicles. You can choose one of these depending on your actual situation:
1. Method of calculation for kilometres of travel:
- The declared amount is 66 minutes per kilometre
- The maximum declared mileage per vehicle is 5000 km
- You do not need documentary evidence, but you need to be able to demonstrate how you calculate your job-related mileage (for example, by providing logging of work-related travel)
- If co-owners use their vehicles for separate revenue-generating purposes, they can declare up to 5000 km per person
Tax Tips
For regular trips, once the distance is calculated, such as' whereis' or Google search or other applications, these records show the number of trips, such as training, lectures, conferences, and so on, to and from headquarters. To sum up and calculate the number of kilometers. If you travel more than 5000 kilometers at work, but you do not have logs or details and substantial evidence to support these costs.
You can only declare a maximum of 5000 kilometers * $0.66.
2. Carlog logging method:
This declaration is based on the percentage of business or work use as a percentage of the total number of vehicles traveling-to calculate the percentage of your business use, you need a journal and odometer readings during the log cycle
The minimum log cycle is 12 consecutive weeks-if the average usage continues to be the same, this percentage will apply to the vehicle over the next five years
Expenses include operating expenses, depreciation, interest on loans, repairs and maintenance, registration fees, third-party compulsory insurance (CTP) and other insurance, fuel costs
The strict rules of the ATO make it important to keep an accurate record of the following. Otherwise, they may doubt the percentage you declare.
1, date of each trip, start and end time
2, odometer readings at the start and end of each trip, total mileage
3, the original capsule 4 for each trip, the start and end date of the log cycle
5, odometer readings at the start and end of the log cycle and total mileage traveled during this period
6, percentage of commercial or work use during that period
7. Tools for keeping records include: physical log books, electronic applications, and EXCEL worksheets
8. The declaration of fuel and fuel costs can be estimated based on your receipt or on the reading of the start and end of the vehicle during the year recorded by the odometer.
9, recommended method of calculation-total mileage / number of kilometres per litre of oil per litre of this type of vehicle x average price per litre
10. All other car costs should be supported by documentary evidence (receipts and invoices)
Tax Tips
When you have a lot of work trips, driving miles is very high, and logging may be more beneficial-even though there is more work to be done at the start because of providing physical evidence, it is worth doing.
* the above method does not apply to motorcycles, general purpose trucks with a deadweight of more than 1 ton or capable of carrying more than 9 persons, vans, etc., for which general tax return requirements are required.
Communications and network costs for reporting work
If you need to use your personal phone and network at work, you can make tax credits for these charges.
Confirm your declaration-ATO requirement
For each fiscal year, if your declaration exceeds $50 deductions, you will need to keep a record of the 4-week representative cycle. These records may include journal entries, including electronic records and bills.
Tax Tips
If you have evidence that your employer wishes or confirms that you work online at home or that you need to use a private phone at work, it will help you prove that you have the right to deduct the fee.
How to allocate the proportion of mobile phones used for work:
According to ATO, since there are many different types of scenarios, you need to determine the purpose of your work on a reasonable basis.
Occasional use
If your purpose of work is accidental and your total declaration credit does not exceed $50, you can declare on the following basis without having to analyze your bill:
- Dial a work call from your landline A $0.25
- Phone calls via mobile phone charge A $0.75
- SMS sent from your mobile phone is 0.10 Australian dollars.
- You need to list the related expenses itemized on the bill.
Regular use
If you use a call package and you receive a breakdown of the bill, you need to determine the percentage of your work use over a 4-week representative cycle, which can then be applied throughout the year.
You need to calculate the percentage on a reasonable basis. This may include:
- Number of work phone calls as a percentage of total calls
- Work talk time as a percentage of total calls
- Amount of data downloaded for working purposes as a percentage of total downloads
Some may question whether this approach is operational in the current environment. What if the phone is only used to receive calls and text messages for work purposes without responding? Our advice is whether it is feasible to use different mobile phones for different purposes. One for personal use and the other for work entirely.
Hope everyone 2018 fiscal year tax returns happy, according to reason strive.
