Be careful what deductions you claim when filling out your 2010-11 tax return, the tax office is cracking down. The ATO is targeting earthmovers, flight attendants, carpenters and real estate employees this year.

The ATO says these people have a higher risk of getting their work-related expense claims wrong. They often don’t have the right documentation to support motor vehicle and travel expenses and incorrectly claim motor vehicle expenses for carrying bulky equipment. Mistakes are also made when claiming home office, mobile phone and internet expenses.

The tax office isn’t trying to entrap tradesmen, flight attendants and real estate employees… it’s trying to warn (or maybe scare) them to fill in their returns correctly. The ATO is writing to 116,000 people working in these professions to tell them about new tax guides for these occupations to help them get their claims right this time.

It’s no surprise the tax office is cracking down on deductions. Over eight million Australians claim around $16 billion in work-related expenses every year. That’s a lot of tax revenue it’s missing out on.

No matter what profession you’re in there are some basic guidelines to claiming work-related expenses.

1. I know this is pretty obvious but the expense must be related to your work and not personal use. That means no claiming home internet connections and electricity bills when you don’t really work from home.
2. You must have paid the expense in the year you’re claiming it, so between 1 July 2010 and 30 June 2011. Don’t try to fudge your dates.
3. If you were reimbursed by your employer for a work-related expense then you can’t claim it in your tax return, you’ve already got your money back.
4. If you’re claiming more than $300 of deductions you need evidence. It’s really important you keep records of these expenses throughout the year. If the tax office asks you to prove your claim, and you can’t, you won’t get the deduction and you may even have to pay a penalty.
5. Paper receipts aren’t the only way to prove your claim, you can also use other records. To claim car expenses you may need to keep a logbook. For travel expenses travel diaries or itineraries can be used if they show dates, places, times and durations of your trips, and the nature of your work activities. You can also use a diary to prove home office usage and laundry costs for work uniforms. Bank and credit card statements showing details of expenses can be used in some situations.
6. You need to keep your all tax records, including expense receipts, for five years incase the ATO wants to take a second look.

Go to the ATO website for more information on what you can and can’t claim. If you are a tradesman, flight attendant or work in real estate I strongly encourage you get your hands on one of the new ATO guides for your profession to help you get your claims right. The taxman will be paying you extra attention this year.