Your Money

ATO targets for your tax return this year

- May 17, 2024 2 MIN READ
ATO targets for 2024

Every year, ahead of tax time, the ATO releases its target areas – what it’s going to pay extra attention to. It is always a timely warning.

This year they will be taking a close look at three common errors being made by taxpayers:

  • Incorrectly claiming work-related expenses

  • Inflating claims for rental properties

  • Failing to include all income when lodging

1. Work-related expenses

In 2023 more than 8 million people claimed a work-related deduction, and around half of those claimed a deduction related to working from home.

Last year, the ATO revised the fixed rate method of calculating a working from home deduction to broaden what is included. They increased the rate you use to calculate your expenses and adjusted the kind of records you need to keep.

The new work-from-home tax rules explained

These changes are in full effect this financial year, meaning you must have comprehensive records to substantiate your claims as you would for any other deduction.

To use this method, you need records that show the actual number of hours you worked from home (like a calendar, diary or spreadsheet), and the additional running costs you incurred to claim a deduction (like a copy of your electricity or internet bill).

Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.

Remember, there are three golden rules for claiming a deduction for any work-related expense:

  1. You must have spent the money yourself and weren’t reimbursed

  2. The expense must directly relate to earning your income

  3. You must have a record (usually a receipt) to prove it

2. Rental properties

Rental properties continue to remain in the ATO’s sights. Their data shows nine out of 10 rental property owners are getting their income tax returns wrong.

They often see landlords making mistakes when it comes to repairs and maintenance deductions on rental properties, so the ATO is keeping a close eye on this.

They’re particularly focused on claims that may have been inflated to offset increases in rental income to get a greater tax benefit.

Performing general repairs and maintenance on your rental property can be claimed as an immediate deduction. However, expenses which are capital in nature (like initial repairs on a newly purchased property and any improvements during the time you hold the property) are not deductible as repairs or maintenance.

You can claim an immediate deduction for general repairs like replacing damaged carpet or a broken window. But if you rip out an old kitchen and put in a new and improved one, this is a capital improvement and is only deductible over time as capital works.

3. Get it right – wait to lodge

As part as its third focus on keeping accurate records, the ATO is also warning against rushing to lodge your tax return on 1 July. If you have received income from multiple sources, you need to wait until this is pre-filled in your tax return before lodging.

They see lots of mistakes in July where people have forgotten to include interest from banks, dividend income, payments from other government agencies and private health insurers.

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 help you get your tax return right.

By lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO.

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