Archive for September, 2009

Common travel expenses you may be able to claim include air, bus, train & taxi fares. If you use  a road vehicle designed to carry a load of one tonne or more, or nine or more passengers, use a  motor cycles, incur bridge/road tolls, parking, car hire fees, meal expenses or accommodation expenses whilst away overnight for work then you have incurred travel expenses.

You cannot claim a deduction for costs associated with travel to and from work however if the travel is from one job directly to a second job you can claim a deduction for costs incurred for that leg of the travel. Travel from the second job to home is not deductible.

You can claim a deduction for costs incurred traveling from your usual place of work to another location for the same employer, for example to a clients premises while still on duty then back to your usual work place or directly home. In this case you can claim the cost of travel to another work location and the cost of returning to your usual workplace or the cost of going straight home. Travel to and from locations for the purpose of study is not covered here as these are claimed under ‘Self Education Expenses’.

Generally parking fees and tolls can only be claimed where there is also a deduction available for the traveling expense, there are a few exceptions to this rule and you can view these on the ATO website.

The treatment of overnight travel for work is varied depending on an individual’s circumstances.

For an employee, this is where they undertake the travel for an activity which is directly related to their income earning activities as an employee. For a business person (sole trader etc) the expense must have been necessarily incurred for the purpose of producing assessable income.

For travel within Australia, no written evidence and no travel records are required if the employee receives a travel allowance and claims no more than the amount considered reasonable by the Tax Office.

If the employee is traveling for 6 nights or more a travel diary or similar must be maintained for travel within Australia or overseas

If no travel allowance is received, or the claim is more than the amount considered reasonable by the Tax Office all travel expenses claimed must be supported by written records. It is always advisable to keep a diary if traveling overseas, or if you are away for any period of time. Records, such as the date and time of meetings, business cards of people attending the meetings etc always help to substantiate any travel claim.

Every year when preparing tax returns we have clients who compare their return with that of their co-workers. The usual story, “Jack does the same job and earns the same as me but his refund is always $Thousands more than mine. Why? “

There are several reasons why this could be so. Say Jack has a dependant wife and no Kids. This means he gets a spouse rebate of $2,159.00. Jack may pay an extra $30.00 per week in tax. This means he gets an additional $1,560.00 in his tax refund. Another answer is that maybe Jack uses a shonky tax preparer.

At this time of year the Tax Office issues warnings about the risks associated with having someone prepare and lodge your income tax return.

If you’re using the services of a tax agent to prepare your tax return it’s a good idea to check they are registered, you can do this by asking to see their Certificate of Registration of Tax Agent.

The Tax Office advises that only a registered tax agent can charge a fee to prepare and lodge your tax return. Unfortunately there are some people out there who pretend to be registered tax agents when they are not. They promise bigger refunds, claim that it is all OK and assure you that there is no risk. Be warned.

Tax Commissioner Michael D’Ascenzo has stated that the Tax Office looks closely at tax returns prepared by people who claim to be tax agents but are not registered with the Tax Agents’ Board.

If you are using an unregistered tax preparer who claims to be a tax agent, then this could increase your chance of being audited by the Tax Office. Your tax return is your responsibility even if someone, including a tax agent, helps prepare and lodge it for you. While anyone can lodge and prepare a tax return on your behalf only a registered agent can charge a fee for their services.

The Tax Office looks for unusual patterns and uses analytical tools to identify returns prepared by people who are not registered tax agents. If they find major inaccuracies when reviewing these returns they may ask the taxpayer for receipts or extra information to verify their claims, and if the receipts are not there, this could result in significant increases in tax payable as well as the possibility of interest and penalties being applied.

If you would like to report an unregistered tax agent, phone the Tax Office on 1800 060 062 between 8.00am and 6.00pm, Monday to Friday.