KDC Accounting

Deductions, Substantiation, ATO requirements

This page is dedicated to how to claim certain deductions that the Tax Office attributes to private and work/business related use.

We are sure you have seen the media reports of the Tax Commissioner, Mr Chris Jordan, hitting out at us tax agents accusing us of helping you to defraud the government by claiming more than you should.
The ATO is intent on turning us into quasi-tax auditors. With this in mind, we remind you of your obligations in relation to just a few deductions;

Until now, the Australian Taxation Office only gets summary information on your tax return. They get a little bit more detail on your rental property. For the 2019 year, they will get granular detail of all of your deductions claimed at D1-D15. This includes motor vehicle claims, travel, uniforms, self-education, and general work-related deductions.

Added to this, the Australian Taxation Office focus on apportioning your claims properly where this is (or should be) private use, we will, by necessity, be spending considerable focus on these claims with all clients.

We will not be including any claims for deductions without a usage diary. Please see our separate details on usage diaries and enclosed copies of the KDC Accounting Usage Diaries. Please print as many as needed.
The Tax Office requires 3 criteria in order to be allowed to claim a deduction. These are:

1) You must have spent the money and be able to prove that you spent the money
2) The item must be
a) For employees: necessarily incurred
b) For small business owners: related to the activity of earning your income
3) You must substantiate the expense in accordance with the Legislation.

Some more information can be found here: Fact Sheet – Records you need to keep

Come back next week – we will have a video of instructions on how to substantiate your deductions.

You can find our Usage Diary Templates here:

WP Usage Diary Portrait Used for one expense type only
WP Usage Diary Landscape Used for multiple expense types – but is small to write on