The ATO has sent out a warning that it is setting its sights on other work-related expense deductions.

Penalties for fraudulent claims can be significant. So before lumping a bunch of work related expenses together and expecting the ATO to automatically agree with your claim, take time to consider the following points.

Before you make a claim for tax deductions, you must be able to show that you spent the money yourself and that you were not reimbursed by your employer. The expense must have been directly related to earning your income and you must have records to prove it.

Where an item or facility is used for both business and private use, a tax deduction can only be claimed on the work portion. For example, if you use your mobile phone or internet for work and private purposes, you can only claim the portion that reasonably relates to your work use.

Evidence is key

Be aware that you are not automatically entitled to claim “standard deductions.” For any work related deduction you need to keep evidence that shows how the claim was calculated. You should also consider if your employer would agree that the expenses were necessary to earn your income and that you were not reimbursed for those expenses.

It is also worth remembering that the ATO has some increasingly sophisticated data matching software. Your expense claims can be automatically matched against other claims that are typical of your industry and anomalies quickly highlighted.