According to the ATO, the key areas of focus for tax time will be:
- work-related expenses
- rental property income and deductions, and
- capital gains from crypto assets, property, and shares.
Mark Chapman, Director of Tax Communications at H&R Block, said work-related expenses, rental properties and cryptocurrency are all well and truly on the compliance radar.
"Every tax time, the ATO focusses on certain hotspots where taxpayers are prone – either accidentally or deliberately – to make errors," he said.
"So, what is expected to be on the ATO’s list this year? Well, essentially, they will look at two main areas; work-related expenses and claims made by investment property owners.
"The ATO recently claimed that there was an $8.7 billion shortfall between the tax individuals are expected to pay and the tax they actually are paying. The ATO believes that work-related expenses claims are the biggest element in that 'tax gap' and have signalled that they’ll be looking closely at these deductions this year."
"H&R Block’s top tip before making any claim is to be confident that you understand what you can and can’t claim and that you have the necessary proof - invoices, receipts, diaries, and so on - that you actually incurred the expenditure and that it was work or business related."
ATO Assistant Commissioner Tim Loh explained that the ATO is targeting problem areas where we see people making mistakes.
“We know there is still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to," he said.
Lodge right, no worries
"We often see lots of mistakes in July as people rush to lodge their tax returns and forget to include interest from banks, dividend income, payments from other government agencies and private health insurers," Mr Loh said.
"For most people, this information will be automatically pre-filled in their tax return by the end of July. This will make the tax return process smoother, save you time, and get your tax return right. If you want to lodge earlier, you must take extra time to manually add all your income."
“Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year," Mr Loh said.
"If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls.
"To claim a deduction for your working from home expenses, there are three methods available depending on your circumstances. You can choose from the shortcut (all-inclusive), fixed rate and actual cost methods, so long as you meet the eligibility and record-keeping requirements."
Rental income and deductions
"If you are a rental property owner, make sure you include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain," Mr Loh said.
“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually, you can ask your registered tax agent for assistance."
Capital gains from crypto assets, property and shares
"If you dispose of an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.
"Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it."
Image by Markus Winkler via Unsplash
Savings.com.au does not provide tax advice. This material has been prepared by Savings.com.au and is for informational purposes only, and is not intended to provide, and should not be relied on for tax advice.
For tax advice relevant to you, visit the ATO or consult an independent tax advisor.