How to avoid an audit by the ATO

Some people may enjoy being the centre of attention, but the wrong attention from the ATO could be a very costly – and not a very enjoyable experience. Last year, many changes were brought in by the Government in direct relation to Covid-19 and Australian employees’ work situations.

Many of us switched from working in an office, to setting up part of the kitchen bench as workspace. The ATO expects that these changes to work environments and working from home arrangements will present with legal work-related claims. They’re on the look-out for fake claims so if you think you can claim travel expenses as well as working from home expenses in your 2020-21 tax return – you might want to think again.

Around 8.5 million Australian claimed nearly $19.4 billion in work-related expenses in their 2020 tax returns, but the facts are that people have changed their work habits, and the ATO expects claims to reflect these changes.

The ATO employ sophisticated data matching programs to seek out claims that don’t align with personal circumstances. The ATO expects many people who have switched to working from home to claim the new 80 cents per hour shortcut method of claiming home office costs. You’ll need a work diary or a time sheet to prove your claims, but this will cover all your running costs and expenses.  However, if you use this method extensively, the ATO would not expect to see claims for travelling between worksites, laundering uniforms or business trips. Claim both ways, and you might have some explaining to do.

The ATO saw a downturn in work-related claims for cars, travel, non-PPE clothing and self-education in direct relation to travel restrictions and limits on gatherings. They expect the trend to flow over into 2021.

When claiming your working from home expenses using the 80 cents per hour short cut method, simply multiplying hours worked by 80 cents will round out your work-related claims. You won’t need to separately calculate costs for specific expenses, and includes all lighting, cooling, heating, decline in value of capital items, cleaning, phone, internet and office consumables. These other costs are absorbed into the 80 cents per hour calculation and cannot be claimed in addition if using this method. The short cut method is only temporary and can be used between 1 March 2020 to 30 June 2021. You won’t incur capital gains tax on your home using this method.


In the previous financial year, the value of car or travel expenses decreased by approximately 5.5%, however clothing expenses increased by 2.6% principally driven by front line workers who were required for the first time to purchase hand sanitiser and face masks. The ATO’s data analytics will be on the lookout for unusually high claims that are not part of trending factors based on work-situations and different careers.

During 2020, the ATO worked at getting Australians through changes to their working lives, but in 2021 they will focus on over-claiming work-related expenses.

If your job relates to physical contact with customers or clients or involves cleaning such as those careers in healthcare cleaning, aviation, hair and beauty, retail and hospitality, the ATO will expect claims on gloves, face masks, sanitiser or anti-bacterial spray. To claim PPE, the item will need to be purchased for use at your work, you must have paid for it yourself and your employer must not have reimbursed you for it.

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