In a recent tax case, the taxpayer claimed 100% of his home internet expense for the financial year but failed to keep contemporaneous records. The deduction was reduced to $50 by the ATO.
The case went to the Administrative Appeals Tribunal (AAT).
During the course of the dispute, the taxpayer provided a record of the family’s home internet usage for a period of time. The records showed that the internet was not used exclusively by the taxpayer for work purposes. For example, the records showed that some of the websites visited, including Facebook, did not relate to the taxpayer’s employment. As a result, the AAT found that the taxpayer failed to show the ATO’s assessment was incorrect.
One of the key points to take from this case is that a claim of 100% business use for these types of expenses is far more likely to attract the ATO’s attention and can be very difficult to prove. Also, in this case, it may have been possible for the taxpayer to claim larger deductions for things like internet and mobile phone usage, but they simply didn’t have the records required to substantiate deductions beyond the $50 amount allowed by the ATO.
Should you have any questions with regard to claiming business expenses, please submit an online enquiry now or call Peter Quinn on +61 2 9580 9166. We also offer a FREE 45-minute consultation should you have other financial planning, taxation or superannuation issues you may wish to discuss.
The information in this document does not take into account your personal objectives, financial situation or needs, and so you should consider its appropriateness having regard to these factors before acting on it. It is important that your personal circumstances are taken into account before making any financial decision and it is recommended that you seek assistance from your financial adviser.