ATO Audit Record Keeping Requirements
FY2022
The ATO audited 5 of my clients who were
employees in February 2018 for their 30 June 2016 tax returns. This
meant that they were required to produce from 1 July 2015 to 30 June
2016 their employer letters, motor vehicle log book, purchase
documents, finance, repairs, insurance, registration and other
receipts such as overnight travel, tools, mobile phone,
depreciation, etc.
80% failed their audits due
to record keeping. The average repayment back to the ATO was $5,000
plus interest @ 10% plus penalty for recklessness of $1,250 =
$7,750. Most of my clients entered into repayment plans.
In 50% of cases their employers for that period from 1
July 2015 to 30 June 2016, 3 years ago, would not support their
claims as they did not want to assist or could not remember back
that far.
In 50% of cases
my clients did not think that they had to keep any records or could
not find any records from 3 years ago.
Records must be
kept for 5 years for receipts, with item descriptions and bank
statements showing that purchase. Do not pay cash for anything. You
need to print out hard copies of everything as it is very difficult
to get bank statements from 3 years ago.
Other items
including depreciation and capital gains cost base documents must be
kept from 5 years after your tax claim.
Employer letters
must be obtained relating to 3 years ago verifying that you needed
each individual item for work and the reason why. It is very
difficult to obtain employer letters from 3 years ago due to
employers not remembering your circumstances, not having the time or
terminating on bad terms.
Motor Vehicles:
Clients are
incorrectly claiming motor vehicle log books travel to and from
work. You cannot claim work travel if you are told to go to a
different location for the day. E.g. A relief or casual teacher
cannot claim work travel because she travels to a different school
each day.
Clients can only
claim work travel for carrying bulky items to and from work if the
items weigh > 35 kgs and each item is described by weight and
dimensions and the employer confirms that he requires you to have
these items and there is not a secure lock up at the site.
Overnight
travel:
You must keep
all receipts, bank statements for 3 months if you are receiving a
meal allowance plus all pay slips showing the payment of the travel
allowance plus confirmation by your employer.
Mobile phone and
internet:
You must print
out all statements and keep a diary for one month marking all your
itemized work v private calls confirmed by your employer. It is very
difficult to get copies of mobile phone records from 3 years ago.
Self education:
You must keep
all receipts and it must be relevant to your current work and your
employer must confirm this.
Home office:
You must keep a
diary for 28 days and claim 45c per hour or claim electricity based
on floor area.
Work expenses:
You must keep
all receipts for stationery, computer supplies, etc and these must
be confirmed by your employer.
Depreciation:
You must keep
all receipts for 5 years after you last claimed
depreciation for each item and it must be confirmed by your
employer.
Rental
properties:
You must have
your loan and refinance documents, interest, insurance, rates,
water, depreciation or quantity surveyor’s report, repairs, agents
annual statement, improvements, capital gains purchase and sale
documents and cost base receipts.
Repairs must not be a
replacement of the whole of something.
I hope we reduce our failure rates. We
are now offering audit insurance.
DISCLAIMER
The information provided in the above documents is not intended to
be, nor should it be construed as tax advice. Any specific
recommendation for a client can only be done after their individual
circumstances have been determined by David Douglas Accountants.
We have clients from the following locations:
Brisbane, Albion, New Farm, Teneriffe, Newstead, Windsor,
Wilston, Bowen Hills, Wooloowin, Herston, Lutwyche, Hamilton, Eagle
Farm, Gordon Park, Fortitude Valley, Clayfield, Ascot, Hendra.
Morayfield, Burpengary, Caboolture, Bellmere, Wamuran, Narangba,
North Lakes, Mango Hill, Kallangur, Dakabin, Deception Bay, Bribie
Island, Elimbah, Kippa-Ring.
We do tax returns for individuals, trusts, companies, partnerships, contractors, ABNs and
sole traders.
Liability limited by a scheme approved under Professional
Standards legislation
