'Don't try to claim personal expenses.' The 8 things the ATO will be looking at very closely this tax time.

Our calendars have flicked over to July, which means we've officially made it halfway through this crazy year, but also... it's tax time. 

With many of us working from home this 2019-20 tax year, our spending habits and expenses have significantly changed. 

And while there are different things we can now claim on tax, there are also a number of things that the Australian Taxation Office will be looking at very closely this tax time in particular. 

"The deductions you usually claim may be different due to COVID-19 – with lower claims for things like work-related travel, car use and clothing and higher claims for working from home," Mark Chapman, H&R Block’s Director of Tax Communications told Mamamia. 

"You might also have different types of income, possibly including JobKeeper, JobSeeker, redundancy payments and income protection insurance payouts."

So, to steer you in the right direction, here's every claim to keep an eye on when you lodge your tax return. 

Work-related and personal expenses.

"Working from home expenses are the big deductible item this year, with about 35 per cent of all Australians working full-time from home over the past few months," says Mr Chapman. 

But that means you can't claim those expenses you might have claimed previously. 

"Don't try to claim deductions for personal expenses such as personal grooming, non-deductible work clothing (such as business suits) and travel from home to work," Chapman says. 

"Our research shows about 27 per cent of myTax lodgers have done that. Private and personal expenses aren’t claimable and you can expect a ‘please explain’ letter from the ATO.


"Also, make sure you only claim for items for which you have proof of purchase like an invoice or receipt. 34 per cent of myTax lodgers tried to make unsubstantiated claims - you can't claim a deduction unless you can prove you spent the money.

"Finally, if your employer has paid for an item on your behalf or reimbursed you for an expense, don't double-dip; you can't claim a deduction unless you are personally out-of-pocket."

According to Lifehacker Australiasome other expenses to reconsider include:

  • Occupancy expenses. This includes interest on housing loans, rent, council rates and building insurance, which are only deductible if you are running a business from home — not if you are just generally working from home. 
  • Overtime meal claims.
  • Motor vehicle claims. The ATO will be looking out for taxpayers who are taking advantage of the 68 cent per kilometre flat rate available for journeys up to 5,000kms. 
  • Incorrectly claiming work-related expenses. The ATO will be watching for taxpayers who claim deductions under the rule that allow work-related expenses of $300 or less to be claimed without receipts. 

To make things a little simpler, the ATO has introduced an 80 cents per hour shortcut method which offers an easier way to claim working-from-home expenses. To find out more about the temporary shortcut method, read our earlier article here.

Property investment claims.

Claims made on investment properties and holiday homes will also be closely monitored this tax time.  According to Lifehacker Australiathese include:

  • Excessive interest expense claims.
  • Incorrect apportionment of rental income and expenses between property owners. 
  • Periods when properties are genuinely available to rent. If you own a rental property, you should only claim for the periods the property is rented out or are available for rent, rather than during periods of personal use. 
  • Incorrect claims for rental properties that are newly purchased. The cost to repair damages that exist at the time that you have purchased your property are deductible over a number of years and can't be claimed immediately. 

Things to remember.

If you usually do your tax return yourself, this is the year you might want to consider getting help. 

"Remember, about one in four people who use the ATO’s DIY option myTax have made mistakes with their returns and over half of Australians are unsure of their entitlements. Those statistics are pre-COVID 19 so with all the unusual features of Tax Time 2020, this is definitely a year to get help with your return."

The good news is, there are simple tips we can follow to boost our tax returns this year. According to Chapman, theses include: 

  • "Keep all your paperwork. Remember, no proof = no claim.
  • "Make sure all your income data is correctly included, such as wages, bank interest, etc.
  • "Make sure all you details are correct, including your name and bank account details. Mistakes will delay the processing of your return.
  • "You may be eligible for the low and middle income tax offset this year. This is worth up to $1,080 for people earning between $48,000 and $90,000. But you need to lodge your return to get it, so don’t delay!
  • "Use a tax agent. Your fee is also tax deductible!"

Feature Image: Getty.