ATO Focus on Excessive Personal Deductions

ESV MG 4305 146

ATO Focus on Excessive Personal Deductions


This tax time the ATO has indicated that they will be paying close attention to rental property expenses and work-related expenses claimed by individuals.


For the 2014 financial year, the ATO limited their attention to particular occupations. However, for the 2015 financial year the ATO has introduced new models to identify claims that are significantly higher than those claimed by people with similar characteristics, such as similar occupations, employment income and residential locations.



The ATO are paying particular attention on work-related claims in relation to the following:

  • Overnight travel;
  • Motor vehicle expenses; and
  • Work related proportion of use for computers, phones and other electronic devices.


The ATO will focus on claims that have already been reimbursed by employers, excessive claims for work related proportion (for example home office, mobile phones and internet connections) without any evidence supporting how it was apportioned and motor vehicle claims between home and work.


As you might be aware the 12% of original value method and the “One Third” of costs method are no longer available from 1 July 2015. The cents per kilometre method will also be capped at 66 cents per kilometre for all vehicles.



The ATO are also focusing on rental property deductions, such as the following:

  • Excessive deductions claimed in relation to holiday homes. Deductions should be limited to the number of days genuinely available for rent amount and should be limited to earnings when renting to family or friends below market rent;
  • Husbands and wives incorrectly splitting rental income and deductions for jointly owned properties;
  • Claims for excessive repairs and maintenance costs shortly after the property was purchased; and
  • Interest deduction claimed for private portion of loans.


Working out what you can and can’t claim can be a complex matter.  Should you have any questions regarding the above and what you can claim, please contact your relevant ESV engagement partner on 02 9283 1666.