ATO targets investments, working from home claims this tax period

The ATO will take firm action to deal with taxpayers who deliberately attempt to increase their reimbursement, falsify records or cannot substantiate their claims. Photo: File.

Investors in stocks, real estate and cryptocurrencies are on the Australian Taxation Office’s (ATO) priority watch list for the 2022 tax period.

The ATO will look closely at income and deductions from rental properties; and capital gains from crypto-assets, property, and stocks.

Taxpayers are also urged to get their house in order long before they file their returns, with record keeping and claims for work-related expenses in the ATO’s sights.

ATO deputy commissioner Tim Loh said the tax office would target problem areas “where we see people making mistakes”.

“We know there are still a few weeks until tax time,” he said. “But starting to organize the records of income and deductions you have kept throughout the year will ensure you have a smoother tax time and ensure you claim the deductions you are entitled to.

“For people who deliberately attempt to increase their reimbursement, falsify records or fail to substantiate their claims, the ATO will take strong action to deal with those ratepayers who gain an unfair advantage over the rest of the community. Australian by doing the right thing.”

Aero Group founder Justin Wong said it was not unusual for the ATO to target these areas.

He said the tax office would review previous years as the pandemic subsides, so “be on your best behavior and have your paperwork ready for tax time.”

Some people have moved to a hybrid work environment since the start of the pandemic, which saw one in three Australians report working from home on their tax return last year.

“If you continued to work from home, we expect to see a corresponding reduction in car expenses, clothing, and other work-related expenses such as parking and tolls,” Justin said.

“If your working conditions have changed, don’t just copy and paste your reimbursement claims from the previous year. If your expenses were used for both business and private use, you can only claim the work-related portion of the expense.

“Don’t claim what you are not entitled to. Make sure you have documentation proving that you incurred the expense. Don’t just put in a number and assume that because it’s below a certain threshold they won’t check. The reality is that if you don’t have a receipt, don’t claim it.

Justin Wang

Aero Group founder Justin Wong. Photo: Thomas Lucraft.

Investors should take extra care to ensure that any profits or losses are reported on their returns, noting that crypto losses cannot be offset by wages and salaries.

If you dispose of an asset during this financial year, such as property, stocks or crypto, including non-fungible tokens (NFTs), you will need to calculate a capital gain or loss and record it in your 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.

“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.”

The ATO is asking rental property owners to ensure they include all rental income on their tax returns, including short-term rental arrangements, insurance payments and withheld rental obligations .

“We know that many rental property owners use a registered tax agent to help them with their tax affairs. I encourage you to keep good records,” Mr. Loh said.

“As all rental income and deductions must be entered manually, you can ask your registered tax agent for assistance.”

Wong was not surprised that the ATO is looking into investment properties.

“It is important to be honest about when the property was let. The ATO has all the information on deposits and rental agreements, it wouldn’t take long for them to figure out if you’re claiming what you shouldn’t.

“However, that shouldn’t stop people from claiming what they are entitled to. The ATO only goes after dishonest people.

Original article published by Karyn Starmer on Riotact.

Maria D. Ervin