Incorrect claims for work-related expenses are in the tax office’s sights this year, with car, travel and clothing expense claims high on the hit list.

Over the past couple of weeks both the ATO commissioner Chris Jordan and assistant commissioner Kath Anderson have spoken about their concern that many taxpayers either don’t understand how the work-related claims system works or are rorting it.

“The results of our audits are showing many errors and over-claiming for work-related expenses – from legitimate mistakes and carelessness through to recklessness and fraud,” Jordan says.

In 2014/15 more than $22 billion was claimed for work-related expenses.

“While each of the amounts over-claimed is relatively small, the overall revenue impact for the population involved could be significant – in the vicinity of $2.5 billion or higher. And that’s just for this category of deductions, work-related expenses,” Jordan says.

“We are concerned about the large number of incorrect claims being made where record keeping requirements have been simplified. – for example $150 for clothing and laundry expenses and the cents per kilometer method for car expenses.”

In 2014/15 around 6.3 million people made claims for clothing expenses totaling almost $1.8 billion.

“That would mean that almost half of the individual taxpayer population was required to wear a uniform or protective clothing or had some special requirement for things like sunglasses and hats,” Jordan says.

“While many of these claims would be legitimate, I wonder how many people have assumed they can just claim $150 regardless of whether or not they have spent that amount on required items.

“We are seeing claims made by individuals for car expenses where their employee informs us there is no requirement to use their car for work, or where their claims are excessive and made with the assumption that no explanation is required.”

The ATO plans to increase its education and support, as well as its scrutiny and enforcement in this area.

Follow the golden rules

There are three golden rules for claiming work-related deductions, according to the ATO website:

• you have to have spent the money and not been reimbursed;
• there must be a direct connection with earning your income; and
• you need to have a record to prove it.

The ATO recommends using its myDeductions tool on the ATO app. You record your deductions at the time and your tax return will be pre-filled with claims.

Assistant commissioner Kath Anderson says many taxpayers don’t have a good understanding of what deductions they can claim. Some think they can make a standard claim of $300 without having spent the money.

“You don’t need receipts for claims up to $300 but you must have actually spent the money and be able to show us how you worked out your deduction if asked,” Anderson says.

She says it’s a myth that you can claim everyday clothes, such as black pants and a plain white shirt, even if you only wear them to work and your employer says you have to. To legitimately claim your uniform it needs to be unique and distinctive, such as a uniform with the employer’s logo.

Here is a list of things you probably can’t claim on a tax return:

• trips between home and work, which are considered private travel;
• private travel included in a work trip, so if you take a work trip that includes private travel you can only claim the work-related portion;
• car expenses for transporting bulky tools or equipment, unless you need the tools for the job or your employer requires you to transport this equipment;
• car expenses that have been salary sacrificed;
• meal expenses for travel, unless you were required to work away from home overnight;
• everyday clothes you bought to wear to work, even if your employer requires you to wear them;
• higher education contributions charged through the HELP scheme;
• self-education expenses when the study does not have a direct connection to current employment;
• private use of phone or internet.