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Claiming Work-Related Car Expenses

Have you ever claimed work-related car expenses? The Australian Taxation Office (ATO) is increasingly concerned about taxpayers making false claims, whether inadvertent or deliberate, and will be focusing on it closely.

According to the ATO, around 3.5 million made work-related car expense claims last year, totalling around $8.8 billion. As this is such a high amount, the ATO is expected to ensure people are not over-claiming. While they acknowledge that the rules in this area can be confusing for people not using the services of a tax practitioner, they must still be sure that people are not over-claiming.

What’s Being Targeted?

Areas of particular interest are home-to-work travel, private trips, and claiming trips that have either not happened or have already been reimbursed by the employer. Every year, the ATO is more and more able to identify red flags and false claims as their technology and data access improves, and therefore people are increasingly more likely to be caught for breaking the rules. A common mistake people make is claiming home-to-work travel. The reason this is generally not deductible is that in your travel time to and from work, your employer isn’t paying you. As such, there is a missing link to earning income which is required to be able to claim that expense.

How will the ATO Find Out?

Better analytics and data access will allow the ATO to do things such as compare claim patterns within certain jobs. If there are significant outliers, they can investigate by checking records or talking to employers. For example, last year there were 800,000 people that claimed exactly 5,000 kilometres under the cents-per-kilometre rule. While this does not necessarily mean that all of those claims are false, it is certainly unusual that there are that many exactly at a round number. This is something that the ATO will now be able to investigate.

How can you Avoid Mistakes

There are three “Golden Rules” to follow that could potentially help you avoid making mistakes when claiming work-related car expenses:

  • Make sure all claims were paid for by yourself, and haven’t been reimbursed by your employer.
  • Ensure it is directly related to earning income – you employer required the trips to be made as a part of the job.
  • Keep records to support every claim – e.g. receipts, log books

It is also worth remembering that there is no such thing as a “standard claim” or a “safe” amount – only claim what you have actually done. The ATO will be scrutinising this area in particular in the coming tax year.

If you have any questions or concerns regarding what can and cannot be deducted, or any other taxation matters, don’t hesitate to get in contact with McKinley Plowman on 9301 2200 or visit

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