Ski holidays, Maltese terriers, child receptionists. Taxpayers have tried to claim all manner of expenses in the past, but the ATO is ready to clamp down this year.

As the new financial year begins, the Australian Taxation Office (ATO) is preparing for 10 million individuals to file their annual tax returns.

But this time, there will be an extra focus on the eight million individuals who are expected to claim work-related expenses.

Bolstered by an extra $130 million in the federal budget, along with more sophisticated data analytics and technology, the ATO said it was better prepared than ever to identify unusual claims.

But what counts as a legitimate claim for a typical worker?

Cars, travel and $25,000 skiing trips

Car and travel expenses make up the largest proportion of work-related claims overall, with 3.75 million people claiming $8.8 billion last financial year.

There are two ways to calculate deductions for car expenses. Work-related travel of up to 5,000 kilometres can be claimed at a rate of 66 cents per kilometre provided the claimant can show how the total amount was calculated.

An alternative method is to use a logbook to claim business expenses, whereby running costs can be claimed — but vehicle improvement costs cannot.

ATO assistant commissioner Kath Anderson said people needed to be aware that they could not claim travel to and from work.

"For most of us, that's actually considered a private expense," she said.

"We've seen quite a few examples of people claiming 5,000 kilometres because they think it's a standard deduction or a safe amount that everyone's entitled to."

Travel expenses may also be claimed for work trips — including meals, accommodation, transport and incidentals — but any private expenses must be subtracted first.

"We did have someone who … was travelling overseas on both business and [personal travel], but claiming the whole lot as business," Ms Anderson said.

"He went on a skiing trip and he claimed $25,000, but had to pay back $23,000."

Phone and internet, not Netflix and Foxtel

Home office and related expenses make up the second-largest claims category, with 6.7 million people claiming $7.9 billion last financial year.

Phone and internet expenses do qualify for deductions, but if the device or service is used for personal use, only the business component may be claimed.

Claims involving streaming services such as Netflix and Stan raise a red flag with the ATO. ( ABC News: Matt Eaton )

And if a claim is submitted for a home office, the individual must be able to show there was additional expense involved.

"It might be that you're sitting at the kitchen table or sitting in front of the TV," Ms Anderson said.

"When that's the case, you're not incurring any extra expense for working at home and therefore you can't claim it."

Other claims that may raise a red flag with the ATO include entertainment streaming services, such as Netflix or Stan.

"We had a case of a teacher once who decided that they should claim their whole Foxtel because they needed to keep up with the things that their students would be watching," Ms Anderson said.

"Needless to say, that claim didn't get through."

Clothing, laundry and the 'biggest myth'

The third-largest claims category, clothing and laundry, is also rapidly growing — almost 20 per cent over the past five years.

In fiscal 2017, 6 million people claimed almost $1.8 billion for clothes and laundry expenses.

Ms Anderson said the "biggest myth" was that everybody was entitled to claim $150 in this category. Last year, about 1.4 million people claimed exactly that amount.

If you're claiming clothes, make sure they are the right kind. ( ABC News: Clarissa Thorpe )

According to the ATO, clothes with logos or protective clothing may be claimed, but conventional clothing that individuals "happen to wear to work" cannot.

"Some people claim [clothes] because their boss says they have to wear a particular colour or particular style," Ms Anderson said.

"Other people might be claiming them because they work in retail fashion and they have to wear something from the latest line.

"You can't claim plain clothing, even if your boss told you to wear it or even if you only ever wear it to work."

The 8-year-old receptionist and the miniature guard dog

The bottom line, according to Ms Anderson, is that work claims must ultimately be exactly that — directly related to the claimant's job.

"The best example we saw was a guy who tried to claim the cost of his 8-year-old son, who actually answered his phone sometimes when he was at home," she said.

"We've also seen a case of a Maltese terrier guard dog and we've also seen someone who asked all their family and friends for their receipts for their pens and stationery."

A Maltese is not necessarily a convincing guard dog in the eyes of the ATO. ( Supplied: Jess Marks Photography )

The ATO's golden rules

If in doubt, the ATO says there are three rules to abide by when claiming work expenses:

1. The money must have been spent by the person making the claim (and must not have been reimbursed); 2. The expense must be directly related to the person's income; and 3. The person must have a record to substantiate how the claim was calculated.

Finally, the ATO points out, there is no such thing as a "safe amount" to claim if the expense is not legitimate.

Ms Anderson said the ATO expected to contact more than 1 million taxpayers — either directly or through their agent — this financial year.

'Get it right the first time'

CPA Australia head of policy Paul Drum said while penalties of up to 200 per cent of tax avoided may be applied under the law, the size of any penalty would depend on the nature of the breach.

"Ordinarily … if a person makes an honest mistake, you'll have to pay the primary tax, so the tax you avoided plus [interest]," Mr Drum said.

For false or misleading statements, the ATO applies a penalty based on a percentage of the shortfall between the correct tax liability and the amount paid by the individual.

Penalties range from 25 per cent to 75 per cent of the shortfall amount, depending on whether the breach was due to carelessness, recklessness or intentional disregard.