In the matter of Hiremani v Commissioner of Taxation [2020] heard by the Administrative Appeals Tribunal, a taxpayer (Hiremani) lost $30,000 in tax deduction claims due to inadequate record-keeping. In this case, Mr Hiremani, an employee of Abacus Innovations Australia Pty Ltd, lodged his 2016 tax return and received an audit notification letter from the Australian Taxation Office (ATO). The ATO examined his deduction claims, which included work-related accommodation and meal expenses, travel, home office costs and self-education expenses. Living in Melbourne by choice and working primarily from home, Mr Hiremani’s employment contract also required him to occasionally travel to Canberra for three days a month. He claimed that he traveled by car seven times in 2016 but had no logbook to substantiate this, in addition to having no documentation of bus and plane travel to Canberra and back. In the end, the Commissioner of Taxation determined these travel and car expenses were not substantiated or supported, and so, disallowed them.

Mr Hiremani was unable to produce supporting documentation for a large part of his travel expenses, but even if he had have been able to, the Tribunal noted that the travel between home and work was not deductible. Although Mr Hiremani had to travel to his employer’s office in Canberra in order to be paid, his travel from Melbourne to Canberra was necessary because of his choice to live in Melbourne.

It was also deemed that Mr Hiremani’s self-education expenses were non-deductible because his course was general in nature and the up-skilling of his employment to the role of manager was not helped by or attributable to the course.

Mr Hiremani’s matter reminds us of the importance of substantiating your tax claims.

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