ATO targets overnight travel and electronic devices in 2015

August 2014

The ATO recently released its annual target list of work-related expenses that it will be targeting through extensive data analysis.

With the rise of a mobile workforce, two areas that are particularly under the spotlight are overnight travel and the work-related use of electronic devices. It's not uncommon for taxpayers to get these types of work-related deductions wrong and the consequences of not keeping records is simple: if your tax return is selected for review and you can't substantiate your claim, it will be disallowed.

So here's what you need to know about claiming work-related expenses and the records you need to keep.

Overnight travel
If you are asked to travel for work and that requires an overnight stay, then it's possible that you may be able to claim.

If your employer provides a travel allowance, most of your expenses are likely to be taken care of. However there are times when your expenses may be in excess of the travel allowance and this is where you may be able to claim additional work-related expenses.

You need to ensure, however, that you keep good records to substantiate your claim, such as:

• Details and evidence of the travel allowance for expenses such as accommodation, meals and incidentals.
• Dates of travel and details of the specific purpose of your travel.
• A travel record or diary of the work undertaken and relevant expenses.
• The expenses you claim must be related to your work activity

If you travel for work and there isn't a travel allowance in place from your employer, you may still be able to claim some expenses if you can demonstrate that the costs were incurred in the course of earning an income away from your regular place of work. You'll need to keep the following records to prove a claim:

• Document the dates/period of travel
• Document the specific purpose of the trip
• Keep a travel record or diary showing your work activity, sufficient information on how specific expenses were incurred and a list all items included in the claim for travel expenses
• Keep all receipts or other documentary evidence.

Being able to document and substantiate your travel expenses is the critical part.

Transporting bulky equipment
If you rely on bulky tools for your job and transport them between your work and home by private car, then you may be able to deduct certain costs as work-related expenses.

It's not enough to carry a few tools, however. To satisfy the criteria for work-related expenses, you need to prove:

• That you need the tools to do your job and moving them by car is the only practicable way to do so.
• That your employer expects that you'll transport them
• That there isn't a secure place at work to leave your tools.

Claiming a deduction for transporting your tools means you may have to prove that your employer expects you to do so as part of your job.  

Claiming a computer, phone or other electronic devices
These days most jobs require the use of a computer, mobile phone or tablet, yet many taxpayers get it wrong when it comes to claiming these as expenses on their tax returns. Many of us are now working more flexibly - from home, out of usual business hours, or when we're travelling for work – so it's a reasonable expectation that we can claim some of the expenses related to use of electronic devices.

However as one of the fastest-growing areas for work-related expense claims, it's important to understand the distinction between work-related expenses and personal use for your devices. You can only claim the cost of work-related use.

Examples of this include:

• A proportion of the cost of home equipment such as computers, printers and phones (items up to $300) or decline in value (items less than $300).
• Evidence of work-related calls on your mobile or home phone bills or work diary.
• Proportion of your internet usage for work.

As usual with deductions, keep good records. These can include phone and internet bills and bank statements and a diary of your work-related use. It may be that there are other running costs you can claim as well for your home office, however it's best to get advice from your accountant before you claim.

What you need to know about claiming your work expenses
There are three clear criteria to always keep in mind with work-related expenses that you need to be able to substantiate to claim deductions:

• You must have incurred the expense in the relevant income year you are claiming the expense.
• The expense must be related to your job or in producting income to satisfy the deductibility test
• You must have a record to prove it.

You will need to substantiate your claims for deductions with written evidence for any amounts where the value is greater than $300, though that has to show the total amount. If your claim is for $300 or less, you need to be able to show how you worked out your claim.

Get advice
Speak to your accountant about your expenses before they start to prepare your return. It's important that they are able to understand your position on how the expenses were incurred and what evidence you have to support your deductions. Phone our team on 02 9957 4033 for guidance or a discussion with our tax team.

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Last updated 21 August 2014. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.