As a hypothetical example, accountant Anthony Restaino uses this example. George, a fine gentleman aged in his 30's lives in Melbourne. Working as a full time employee from Monday to Friday, he travels in his personal car to work.
When filing the income tax return for the year 2015-16, George claimed deductions in lieu of the car expense for travelling to office and back. He used the claim that he had to carry various tools (sometimes bulky) to his office which included torch, equipment and safety vest in the car.
When George based his claims, he had attracted audit attention. This was because the claims for deductions he had made were a much higher figure than those of his peers in the same occupation.
When Anthony Restaino, accountant at a renowned firm on the Gold Coast, reviewed the case, it came to light that the employer had facilities for official equipment on the business site, and that carrying the tools in his car was solely his own choice. After careful consideration of the situation, Anthony Restaino studied the case and came to the conclusion that it was George’s own will to use his personal car, and in the case being considered, tax laws do not allow a deduction to be made. As such, all the expenses pertinent to travelling to office and back which were claimed as taxed deductible had to be paid by the claimant himself. These expenses were not a tax allowable expense and therefore, he had to pay $2000 for tax and 80$ for interest.
However, the company did consider that George had been an excellent employee and therefore his performance was taken into account when considering his penalty. It is evident from the case that the person in question misunderstood the tax rules and that is why he claimed a tax deduction for such an expense. It is therefore advised to study the tax laws carefully or hire a tax advisor to stay away from such mishaps!
For information about tax related issued, contact Anthony Restaino, accountant at Trak Accountants, Gold Coast.
