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Facebook browsing leads to taxpayer’s work-related deduction downfall

Close scrutiny of a Tasmanian man’s internet browsing history has led to him being denied his work-related expense claims, as the Administrative Appeals Tribunal stresses the need for contemporaneous records ahead of tax time.

Tax&Compliance Jotham Lian 11 May 2021
— 1 minute read

The tribunal ruled last week that Shannon Spencer, a TasWater water services operator, was not allowed to claim $179 in home internet expenses for the 2017 financial year and $730 for the subsequent financial year.

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Mr Spencer’s claims were for the total internet bill during the year, but the AAT found that he had not used his home internet exclusively for work purposes.

Despite failing to keep records of his internet usage during the two income years, Mr Spencer attempted to justify his claims by producing his internet browsing history in 2020. The AAT accepted that some websites visited were related to his job but ruled that others, such as Facebook, were unrelated to his employment.

The tribunal ultimately denied his claim, ruling that the ATO’s decision to allow a $50 deduction for each year was appropriate considering he had failed to produce “reliable contemporaneous records” to prove that the assessment was incorrect.

Mr Spencer’s claim of $907 for mobile phone expenses was also rejected on the basis that he failed to keep a record of his usage.

“There is simply insufficient evidence before the tribunal to be satisfied that Mr Spencer is entitled to the deductions he has claimed, particularly as Mr Spencer did not keep contemporaneous records of usage,” said AAT member Lynette Rieper.

He also attempted to claim $13,200 for work-related car expenses over the two financial years by claiming the maximum 5,000 business kilometres under the cents per kilometre method for two of his vehicles.

The AAT amended the claim to just $4,236 across the two years after it found that Mr Spencer had failed to make a reasonable estimate of business kilometres associated with emergency call-out situations.

The tribunal’s decision comes as the ATO flags four ineligible work-from-home claims that it will be keeping a close eye on this year, as taxpayers continue to operate out of a hybrid working environment in light of the pandemic.

Work-related car expense claims have also come under intense scrutiny from the Tax Office in recent years, with the ATO noting that 3.6 million taxpayers claimed the popular deduction in 2017–18 to the tune of $7.2 billion.

“While some claims of exactly 5,000km are legitimate, we’ve found many people are unable to show how they’ve arrived at this amount, and as a result, they’ve had their claim reduced or disallowed in full,” said ATO assistant commissioner Karen Foat in 2019.

“We are still concerned that some taxpayers aren’t getting the message that overclaiming will be detected, and if it is deliberate, penalties will apply.”

Facebook browsing leads to taxpayer’s work-related deduction downfall
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Jotham Lian

Jotham Lian

Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it. 

Tax&Compliance