H&R Block has warned builder’s labourers to be aware of the Australian Taxation Office (ATO) targeting their occupation for audit activities, but to not be put off from claiming their entitlements in 2013 tax returns.
Each year the ATO selects occupations that it plans to target in relation to work related expenses claims. This year the list includes employee Building and Construction Labourers, Project Managers and Supervisors and Sales and Marketing Managers.
The ATO will be using their computer systems to explore any perceived ‘irregularities’ that may trigger an audit or review of their tax return.
The audit may include the ATO writing letters to taxpayers whose claims are at the upper level of average for their occupation; targeting taxpayers whose claims have increased significantly in the past few years and it may require the taxpayer to complete work related expense information sheets when lodging their tax return.
“Every year some individuals in occupations targeted by the ATO freeze-up and become over-cautious in making their claims,” said H&R Block Regional Director, Frank Brass.
“Some taxpayers whose occupations are being audited, fail to claim legitimate tax deductions, as they are unsure of the legitimacy of the deduction, or are hoping not to draw attention to themselves. Over caution can mean missing out on legitimate tax deductions.”
Mr Brass said the key is to understand what is a legitimate deduction, be prepared and don’t panic.
“Make sure that you have all the necessary records to substantiate your claims, and then claim accordingly. If the Tax Office does review your tax return you know you will not have any problems.”
The main focus of the ATO scrutiny is predicted to be deductions relating to key areas such as motor vehicle and travel expenses; equipment and tool purchases; and mobile phone costs. For those taxpayers subject to the review, the ATO will be looking for sufficient documentation to support claims.
“One of the best ways of supporting car claims is to keep a log book of travel for 90 days. Then choose a method that gives you the best claim. Without a log book, your claim will be restricted,” said Mr Brass.
He also advised that while you cannot claim the cost of travel to and from work, if you need to carry bulky tools (generally over 20kg), then you can claim as long as there is no secure areas to secure your tools and equipment on the worksite.
Tools that you purchase and use exclusively for work can also be claimed, but if the cost is more than $300 you need to depreciate the tools over their effective life.
For mobile phone claims, Mr Brass recommended establishing a log for a minimum of 4 weeks of mobile phone usage to determine the work related percentage, so you can justify the basis of the claim.
Mr Brass also reminded taxpayers that are being paid an allowance, that they will still be required to have the necessary receipts/records to substantiate your claims.
Mr Brass concluded by saying that anyone who is unsure should seek from tax professionals, like H&R Block, who can help you at every stage of your return.
