A recent decision by the Administrative Review Tribunal highlights the critical importance of maintaining proper documentation when claiming work-related deductions.
In this case, a full-time engineer claimed over $61,000 in work-related expenses in their 2023 tax return, including:
- Car expenses
- Ride-share and taxi travel
- Clothing
- Home office costs
The Australian Taxation Office disallowed the majority of these claims, and the Tribunal ultimately upheld the ATO’s position due to insufficient and inconsistent supporting evidence.
Key Issues Identified
- Car logbooks were not maintained contemporaneously and conflicted with vehicle service records
- Ride-share claims lacked essential details such as date, time, and business purpose
- Home office expenses were based on estimates without supporting bills or documentation
Why Getting It Right Matters
This case reinforces a fundamental principle in tax compliance:
A deduction is only as strong as the evidence supporting it.
Incorrect or poorly substantiated claims can lead to:
- Denial of deductions, resulting in higher taxable income
- Penalties and interest charges imposed by the ATO
- Increased likelihood of audit or review activity
- Unnecessary stress and time spent responding to ATO enquiries
Importantly, even if an expense is genuinely work-related, it cannot be claimed without appropriate records. The burden of proof always rests with the taxpayer.
Practical Takeaways
To ensure your claims are compliant and defensible:
- Maintain contemporaneous records (not reconstructed after the fact)
- Keep clear documentation such as invoices, receipts, and usage logs
- Record the business purpose of each expense
- Use ATO-compliant methods for calculating deductions (e.g. logbook method for vehicles)
How JTCA Can Help
At JTCA, we go beyond basic tax return preparation. Our team works proactively with clients to ensure that claims are:
- Accurate and fully substantiated
- Optimised within ATO guidelines (maximising legitimate deductions while managing risk)
- Supported by proper record-keeping systems and processes
We can assist with:
- Setting up practical record-keeping frameworks tailored to your situation
- Reviewing your current claims to identify risk areas and missed opportunities
- Providing ongoing guidance on what can and cannot be claimed
- Representing and supporting you in the event of an ATO review or audit
Key Takeaway
Good tax outcomes are not just about claiming more—it’s about claiming correctly.
A well-prepared, well-documented tax position not only protects you from risk but also gives you confidence and clarity in your financial affairs.
The information on this website/article is general in nature and does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider whether it is appropriate for your circumstances. Where applicable, you should obtain and review the relevant Product Disclosure Statement and seek advice from a licensed financial adviser before making any decision about financial products or strategies.
