Other Work-Related Expenses

Along with the motor vehicle claim, this item is often the largest claim.   It is therefore usually put under the most scrutiny by the ATO.   As there are multiple ways of making claims in this section of the tax return, there are also multiple substantiation requirements.   Items requiring an apportionment between private and business/work related use are the items that are most often denied by the ATO, as taxpayers very rarely have the correct substantiation to validate the claim.

In order to make a valid claim where there is apportionment between private and work/business related use, a basis for the apportionment must be provided.   A basis is more than a mere estimate.   There must be some record keeping and calculations performed by the taxpayer.   

Most common examples are an apportionment of telephone expenses or internet expenses.   Usually a taxpayer would provide something such as ''telephone - $60 per month at 50% business/work related use''.   In order to substantiate the claim, the invoices for the whole year's telephone must be provided.   

The basis for the apportionment must also be provided.   This would be a diary covering 4 weeks/1 monthly billing period of calls and noting which calls were private in nature and which calls were business/work related.   If there were 50 calls in total and 25 of them were related to work, the 50% claim would be accurate.  

For an internet claim, a good basis of apportionment would be to keep a diary for 4 weeks/1 monthly billing period as per the telephone apportionment.   However, this time it would be more practical to keep a time log of hours spent working on work/business related items vs time spent on personal/private related items.   For example, if you spent 10 hours during the month attending to work related emails and 90 hours over the month using your internet to stream Netflix/Stan etc., a reasonable apportionment would be to claim 10% of the internet expense (10 of the total 100 hours).

Please click here for further information regarding apportionment.

Other items such as home office expenses are based on an ATO hourly rate.   The substantiation for this amount would require a diary to be kept noting the number of hours spent working from home over a 4 week period.   For example, if you spent 40 hours working from home in one month (where that month was representative of the financial year as a whole), a claim of 40 hours per month over 11 months (assuming 4 weeks of annual leave taken per year) would be reasonable.


An ATO review or audit requires evidence of all deductions and proper substantiation documentation (such as log books and diaries).   If the appropriate substantiation and evidence cannot be provided, the unsubstantiated claim will most likely be reduced or denied completely.   

If this happens, there is also a penalty applied by the ATO.   Along with the possibility of a large reduction in your refund from the ATO and associated penalties/fines, there may also be a significant cost associated with preparing your documents for ATO requirements.   Our professional costs can be far in excess of the original tax return cost, even if the ATO don't adjust anything in your return.   We do offer Audit Insurance which covers the professional costs associated with ATO reviews and audits.   However, this insurance does not cover you against any reduction in refund from the ATO and/or penalties and fines applied by the ATO as a result of your audit.

The substantiation required for an ATO audit depends upon the type of claim.   The amount claimable on your tax return is only the portion that you actually paid for (not reimbursed to you by an employer or third party) and only claimed to the extent that the cost was business/work related (private use must be apportioned and removed from the claim).   Tax invoices/receipts must be available to supply to the ATO upon request and generally a line item on a bank or credit card statement is not sufficient evidence.


Please note that as your tax agent, we do not need you to provide us with any invoices or any other form of substantiation such as logbooks or diaries.   However, if you were ever to be audited, you would need to show all forms of substantiation for all claims to the ATO.