Why you may not get away with any creative accounting this tax year

Article by Morrows

It is not uncommon for tax payers to take advantage of our tax system and reduce the taxable income as much as legally possible. However, the ATO are taking notice of certain specific areas that are commonly being taken advantage of and are taking a stand. As a result, there may be a number of tax audits this year and letters from the ATO requiring individuals to explain why they have claimed work related expenses on their tax return, when in fact they are not really work-related expenses.

Areas that are a key focus for the ATO include:

Work expenses

The ATO has reason to believe that there are some taxpayers that are have taken advantage of the thresholds that are put in place to be deducted for work expenses. The certain fields that are going to be heavily scrutinised are:

  • Claims for clothing, dry cleaning and laundry expenses that are related to work. The exemption from keeping receipts for people who spend less than $150 on laundry expenses
  • Deductions for home office use in which the ATO believes a number of taxpayers are not actually using their home as their place of business
  • Work-related mobile phone and internet costs
  • Motor vehicle claims where taxpayers are taking advantage of the deductions available for journeys up to 5000km by automatically claiming the maximum threshold

It is also believed that some taxpayers have been incorrectly claiming deductions under the rule that if they incur under $300 worth of work-related expenses, they may claim the maximum $300 without incurring the expenses.

Property expenses

Holiday homes

Some taxpayers have been claiming expenses for their holiday homes due to renting them out when in actual fact, they have not been available during peak times around vacation periods.


Many Australians are utilising their spare rooms to make some extra income through Airbnb. However, many people have been incorrectly claiming the full main residence exemption from Capital Gains Tax. Only a partial exemption may be available when you sell your property if you have used your main residence to produce income during the life of ownership.

As technology improves, the ATO has access to a wide range of resources in order to assist them with the auditing process. Due to the rise of social media, there is more data about individuals out in the world, which the ATO can now use to determine if an individual’s claim was valid or not.

If you have any questions in regard to your tax claims, contact your Morrows tax advisor today to organise a meeting.

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