ATO AUDIT OR OBJECTIONS Work Related Car Expenses
The Australian Taxation Office (ATO) choose to audit certain industries or individuals each year. The next two blogs will look at some key areas that the ATO look at when conducting an audit, or when you decide to object a reduction in your tax return claims, in two of the most common areas where people claim deductions:
- Work-related car expense claims; and
- General work-related claims (such as phone and internet claims).
This week’s blog focuses on the car expense claims and what, in the event of an audit or objection, you will need to provide and prove to ensure you get the claims you are entitled to.
What will happen if I get audited or object an ATO reduction?
If you get audited, you will be notified by the ATO in writing that have objections to your tax assessment. In this letter, they will request supporting information for your claims, which would include a logbook for a work-related car expense claim. The ATO may also call you, or your employer, to confirm information about your tax return.
If you are objecting an ATO decision, you will need to complete an Objection form – for tax payers form and fax or post the form to the ATO. This form will include information on why you think the decision is incorrect and any supporting document that you have to back up your opinion (such as a logbook or cents per kilometre claim calculations). Alternatively, your tax agent (or the team at Walker Hill) can lodge this form on your behalf.
What exactly will the ATO look at?
This depends on what information the ATO are wanting to confirm, and what sections of your claim they are disputing. However, with an audit which includes the magnifying glass being pulled out on work-related car expense claims, the ATO will be wanting to check that the expenses you have claimed are legitimately for work purposes, the kilometres are accurately calculated and that the information you have supporting your claim is accurate.
How strict are the ATO with record keeping?
In one word – very. The ATO have strict guidelines that they ask you to follow for work related car expense record keeping. This can be in the form of a logbook or calculations if you have used the cents per kilometre method for your claim. In both instances, however, the records need to be clear, complete and accurate.
Also, keep in mind that ATO will double check your figures and calculated kilometres travelled through google maps and the overall accuracy of your log book (such as the logbook beginning and ending period, total vs business use percentage, kilometres travelled in a journey and why the journey was made).
What happens if I do not have a completed logbook or calculations for my claims?
Unfortunately, the ATO can decide how lenient they wish to be (or not be) if you can only provide them with incomplete information. In this instance, the ATO may choose to reject your objection or part of your objection. Regardless of their decision, you will be notified in writing with their supporting documentation on why and how they have reached the decision they have come to, including citing legislation, case studies and other information that they may have such as correspondence.
How do I find out more?
If you’d like further information on ATO objections and audits, feel free to contact us at Walker Hill by emailing firstname.lastname@example.org or calling our office on 07 3367 3155.