What to watch out for when working from Home. By Steve Marsten.

More Australians then ever before are making work-from-home claims this tax year, and the ATO is gearing up to catch common blunders like phone and internet deductions. The Tax Office believes that a high proportion of mistakes, errors and “questionable claims” is prompting them to increase scrutiny on work-from-home expenses.

They don’t necessarily take into account the fact that more and more small businesses are allowing staff to work from home and more business owners are establishing businesses from home.

Where applicable - taxpayer’s can claim costs incurred as a direct result of working from home, but the ATO is watching for those who blur the line between private use and work use expenses.

While there is a rising trend of employees working from home, and while extra costs related to working from home are usually deductible, the ATO believes they are seeing some taxpayers either over-claiming or claiming private costs. This is according to assistant commissioner Kath Anderson.

In many cases there is mounting evidence that taxpayers don’t know what they can and cannot claim. Hence, often taxpayers who chance their arm by undertaking the preparation and lodgement of their own tax returns risk not understanding how the law applies to their deductions and the level of risk that they exposing themselves to where they have not sort professional advice or assistance.

We often see some taxpayers claiming expenses they never paid for; expenses their employer reimbursed; private expenses and expenses with no supporting records.

It’s important to realise that the ATO is carefully monitoring various claims. It’s near impossible, for example, to claim ones entire amount of expenses like their internet or mobile phone, not just the work-related component. Claims for the work-related portion of expenses like phone, internet, and depreciation of your computer, printing and stationary are all allowable though it’s important to understand that supporting documentation and diaries can be useful to galvanise the claim.

Additional costs of running expenses like electricity for heating, cooling and lighting can also be deductible, but you need to be able to demonstrate that there were additional costs incurred by working from home.

You see, you cannot work from home and sit in front of the TV or at the kitchen bench doing some emails; it’s unlikely that you are incurring any additional expenses. However, if you have a separate work area, then you have an arguable position that allows you to claim the work-related portion of running expenses for that space. For more information feel free to call the team from UHY Haines Norton CQ on 4972 1300.