Subscribe to our newsletter

ATO announces crackdown on dodgy car claims

The ATO has announced it is cracking down on dodgy car claims, after work-related car expenses totalled $7.2 billion in 2017-18.

ATO announces crackdown on dodgy car claims
smsfadviser logo
  • Maja Garaca Djurdjevic
  • June 26, 2019
share this article

The Australian Taxation Office (ATO) is warning taxpayers that work-related car expenses will face greater scrutiny during tax time 2019.

Assistant commissioner Karen Foat said, over 3.6 million people made a work-related car expense claim in 2017–18, totalling more than $7.2 billion.

“We are still concerned that some taxpayers aren’t getting the message that over-claiming will be detected and if it is deliberate, penalties will apply,” she said.

Ms Foat explained that while the ATO trusts that some people do make legitimate mistakes, the Tax Office is concerned that many people are deliberately making dodgy claims in order to get a bigger refund.

“We see taxpayers claiming for things like private trips, trips they didn’t make, and car expenses their employer paid for or reimbursed them for.

“Doing the wrong thing is not victimless. When you claim a refund you’re not entitled to, you’re stealing from the whole community and disadvantaging those who do the right thing,” Ms Foat said.

One in five car claims are exactly at the maximum limit that doesn’t require receipts. Under the cents per kilometre method, taxpayers don’t need to keep receipts, but they do need to be able to demonstrate how they worked out the number of kilometres they travelled for work purposes.

“While some claims of exactly 5,000km are legitimate, we’ve found many people are unable to show how they’ve arrived at this amount, and as a result they’ve had their claim reduced or disallowed in full,” Ms Foat said.

The ATO cautioned that its sophisticated analytics compares taxpayer claims with others earning similar amounts in similar jobs. Where it identifies questionable claims, the Tax Office will contact taxpayers and ask them to show how they have calculated their claim.

In some cases, where further scrutiny is warranted, the ATO may even contact employers to confirm whether a taxpayer was required to use their own car for work-related travel.

“Simply driving between work and home is not enough to warrant a deduction. You must have a work-related need to travel while performing your job, like travelling from site to site or be required to transport bulky tools,” Ms Foat said.

Receive the latest Public Accountant news,
opinion and features direct to your inbox.

related articles