You know it’s tax time when the Australian Tax Office releases its annual ATO hit list of the areas they are targeting for special attention.
This year the ATO hit list is focused on:
- work-related expenses;
- rental property income and deductions; and
- capital gains from crypto assets, property, and shares.
“The ATO is targeting problem areas where we see people making mistakes,” explained Assistant Commissioner Tim Loh. “It’s important you rethink your claims and ensure you can satisfy the three golden rules.”
ATO’s three golden rules
- You must have spent the money yourself and weren’t reimbursed.
- If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income.
- You must have a record to prove it.
There is still some weeks left until tax time, but start organising the income and deductions records you’ve kept throughout the year now. This will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to.
When it comes to work-related expenses, some people have changed to a hybrid working environment since the start of the pandemic (which saw one in three Aussies claim working-from-home expenses in their tax return last year). If you have continued to work from home, the ATO 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.
You can easily keep track of your expenses with the myDeductions tool in the ATO app. Just take a photo of the receipt in the app and record the details of the expense. Then at tax time, simply upload the information directly to your return in myTax, or email it to your registered tax agent.
Property, shares and other assets
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.
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.
Crypto is a popular type of asset and the ATO expects to see more capital gains or capital losses reported for crypto in tax returns this year. Remember you can’t offset your crypto losses against your salary and wages.
Through their data collection processes, the ATO knows that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations.