The ATO is warning taxpayers to be vigilant about a range of claims that will get more attention during tax time this year, from work-related expenses to cryptocurrency earnings.
Assistant Commissioner Tim Loh said the ATO was targeting problem areas where he saw people making mistakes.
“It’s important that you rethink your requests and make sure you can meet the three golden rules,” Loh said.
“First you had to spend the money yourself and weren’t reimbursed. Second, if the expense is for a mix of income and private use, you can only claim the part that relates to the generation of income. Finally, you must have a record to prove it.”
Mr Loh said the ATO places a strong emphasis on good record keeping, urging taxpayers to get organized early.
“We know there are still a few weeks to go before tax time, but if you start organizing the records of income and deductions that you have kept throughout the year, it will ensure a smoother and easier tax time. will ensure you claim the deductions to which you are entitled,” Mr. Loh said.
“For people who deliberately attempt to increase their reimbursement, falsify records or fail to substantiate their claims, the ATO will take firm action to deal with those taxpayers who gain an unfair advantage over the rest of the Australian community. who does the right thing. .”
Mr Loh said the ATO often saw many errors in July as people rushed to file their tax returns and forgot to include bank interest, dividend income, payments from other agencies government and private health insurers.
For most people, this information would automatically be pre-populated on their tax return by the end of July.
“It will make the tax filing process easier, save you time and get your tax return correct. If you want to get housed sooner, you need to take more time to add all your income manually,” said said Mr. Loh.
“You can check whether your employer has marked your tax return as ‘tax ready’, as well as whether your pre-fill is available in myTax before you file.
“This way, a change doesn’t need to be made later, which could cause delays in your refund.
Mr Loh said available pre-fill information and availability to accommodate could be easily checked in the ATO app.
“While we receive and compare extensive information about rental income, foreign source income and capital gains events involving stocks, crypto assets or property, we do not pre-populate all of this information for you,” said he declared.
The ATO said it had seen a significant change in work-related expenses as one in three Australians declared work-from-home expenses on their tax returns last year.
Mr Loh said the ATO expects taxpayers to make reasonable claims for home office and travel expenses.
“Some people have moved to a hybrid work environment since the start of the pandemic. If you have continued to work from home, we expect a corresponding reduction in car, clothing, and other work-related expenses such as parking and tolls,” said Mr. Loh.
Mr Loh said that to claim a deduction for home-based expenses, three methods were available depending on the circumstances. These were the abbreviated method (all inclusive), flat rate and actual cost.
“Each individual’s work-related expenses are unique to their circumstances. If your working conditions have changed, don’t just copy and paste your requests from the previous year,” he said.
“If your expenses were used for both business and private use, you can only claim the work-related part of the expense.
“For example, you cannot claim 100% of cell phone expenses if you use your cell phone to call mom and dad.”
H&R Block’s tax communications manager, Mark Chapman, said the ATO has chosen to focus particularly on homework deductions this year.
“With millions of Australians having worked from home for part or all of the last fiscal year, this will inevitably be a source of stress for Australians as they try to understand the three methods of claiming – actual expenses, the 52 cent method and the 80 cent method,” he said.
“In particular, taxpayers will need to be aware of the wide disparity between what can be claimed under the three methods and also the record keeping burden they impose.
“While the ATO’s abbreviated method has the lightest record-keeping burden, it generally yields by far the lowest tax deduction.”
Rental income and deductions
Rental income and deductions had also become a focus this year, with the ATO warning rental property owners to include all rental income on the tax return, including short-term rental arrangements, insurance payments and rental deposits withheld.
“We know that many rental property owners use a registered tax agent to help with their tax affairs,” Loh said.
“I encourage you to keep good records, as all rental income and deductions must be entered manually, you can ask your registered tax agent for assistance.
“If we notice an anomaly, it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return.
“We may also ask for supporting documentation for any claims you make after your notice of valuation issues.”
Mr Chapman said the focus on landlords of investment properties was likely to be particularly pronounced as rental losses were likely to be larger than normal this year due to the COVID crisis.
He said the key tip was to make sure owners keep good records.
“If you can’t substantiate it, you can’t claim it, so it’s essential to keep invoices, receipts and bank statements for all property expenses, as well as proof that your property was available to rent, like rental listings,” Mr. Chapman said.
Crypto Capital Gains
The tax office said it will also focus on cryptocurrency earnings this tax period.
Mr. Loh said that if taxpayers had disposed of an asset such as property, shares or crypto assets, including NFTs during this financial year, they would have to calculate a capital gain or loss and record it. in the tax return.
“Crypto is a popular type of asset and we expect to see more capital gains or losses reported on tax returns this year,” Loh said.
“Generally, a capital gain or loss is the difference between what an asset costs you and what you receive when you dispose of it.
“Remember that you cannot offset your crypto losses with your salary and wages.
“Through our data collection processes, we know that many Australians are buying, selling or trading coins and digital assets, so it’s important that people understand what this means for their tax obligations.”
Mr Chapman said the ATO was collecting bulk records of Australian cryptocurrency service providers appointed under a data matching program to ensure that people who trade in cryptocurrency pay the correct amount of tax.
“The data to be provided to the ATO will include information on buying and selling cryptocurrency,” he said. “The data will identify taxpayers who do not properly disclose their income details.”
Tony Zhang is a reporter for Accountants Daily, which is the leading source for news, strategy and educational content for professionals working in the accounting industry.
Since joining the Momentum Media team in 2020, Tony has written for a range of his publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has worked full-time at Accountants Daily since September 2021.