The Australian Taxation Office (ATO) has announced its 2022 tax-time hit list. The four priorities for the ATO this tax time are:
- Record-keeping
- Work-related expenses
- Rental property income and deductions
- Capital gains from crypto assets, property and shares
ATO assistant commissioner Tim Loh said the ATO was targeting problem areas where it saw people making mistakes.
“It’s important you rethink your claims and ensure you can satisfy the three golden rules,” Loh said.
- 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
Record-keeping
For those who deliberately try to increase their refund, falsify records or cannot substantiate their claims, the ATO warned it would be taking firm action.
Loh said the ATO was keeping an eye out for those taxpayers who were gaining an unfair advantage over the rest of the Australian community who were doing the right thing.
“We know there are 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,” Loh said.
Lodge right, no worries
Loh said the ATO often saw a lot of mistakes in July as people rushed to lodge their tax returns and forgot 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. If you are able to wait until your income statement is marked as ‘tax ready’ and you pre-fill information is ready, you won’t need to make any amendments later, which could result in delays to your refund.
Available pre-fill information and readiness to lodge can be easily checked in the ATO app this tax time.
Work-related expenses
With one in three Australians now working in a hybrid arrangement since the start of the pandemic, the same proportion are claiming work from home expenses on their annual tax return.
If you continue to work from home, the ATO expects to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls.
To claim a deduction for 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, as long as you meet the eligibility and record-keeping requirements.
Rental income and deductions
If you own a rental property, you need to include all income received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain. This means you need to have strong record keeping practices in place.
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 received when you disposed of it. As crypto gains popularity, the ATO are expecting to see more capital gains or capital losses reported in tax returns this year.
You can’t offset your crypto losses against your salary and wages.
If you have any questions about these top four priorities for the ATO this tax time, please contact your Arabon accountant.
