The Australian Taxation Office (ATO) is threatening to crack down on incorrect claims for work expenses this year, with a specific focus on work-related car expenses.
Many Australians claim work-related mileage on their cars at tax time but a fair proportion may be claiming for mileage they’re not entitled to.
If caught, people may be forced to pay back deductions or, in extreme cases, face prosecution. The best approach is to manage claims carefully to avoid doing the wrong thing, according to Concur.
Matt Goss, managing director, ANZ, Concur, said, “Some people try to get away with claims such as the cost of travel to and from work, which is rarely deductible. Many people aren’t aware of what they can rightfully claim. When it comes to car mileage, keeping accurate records is absolutely essential to avoid falling afoul of the ATO.”
For many Australians, this isn’t a concern because their employers reimburse car mileage directly. For organisations, however, tracking transportation is one of the top 10 expenses they incur.
Concur has developed four key recommendations for businesses to manage transportation and mileage expenses easier so they can keep company costs down, and make claiming at tax time easier and more accurate.
1. Use tools to improve record-keeping accuracy
When claiming mileage expenses, people often over-estimate the distance they travel. Mapping apps like Google Maps can help calculate the exact distance driven. Through integration with expense apps like Concur, it’s possible to create an accurate expense report or mileage claim by simply selecting start and end points (and any stops in between).
2. Keep monthly reports
Submitting monthly mileage reports rather than daily reports reduces the burden on the business. This means the business can process reimbursement requests faster. For employees not being reimbursed but, instead, claiming the mileage on their tax, cumulative totals can make it easier to calculate the overall claim.
3. Make tracking mileage accurate and easy
Mobile solutions that are fun and easy to use will increase the chances that people will use them to accurately monitor their mileage. This could include auto-detect mileage option in an expense management app that’s accessed via a smartphone, or a device for the car itself that integrates into the expense management app. This is easier and more accurate than keeping a written logbook in the car.
4. Consider other methods of transport
In some cases, it might make sense for employees to fly or take other transport options as opposed to driving. Reimbursing or paying for these alternative methods up front can reduce the confusion when it comes time to claim car mileage deductions.
Matt Goss said, “Managing car mileage claims and expenses boils down to keeping accurate records. Using an automated system to do that makes life easier for employees and employers alike.”