The Australian Taxation Office (ATO) has announced its focus areas for this Tax Time.
Landlords, those working from home, and investors have moved to the top of the ATO hitlist with rental property deductions, work-related expenses, and CGT all being subject to extra scrutiny this financial year.
According to ATO Assistant Commissioner Tim Loh, the ATO will be prioritising areas where mistakes are “common”.
The ATO also expects to be issuing fewer refunds, leaving more taxpayers in debt.
“We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return,” Mr Loh said.
Currently, the ATO’s review of income tax returns shows that 9 in 10 rental property owners are getting their returns wrong (i.e. omitting rental income, overclaiming expenses, or claiming for improvements to private properties.)
Rental property owners should understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes (or the loan was re-financed for some private purpose).
87% of individual rental owners use a registered tax agent to prepare their income tax returns. Work with your tax agent to review your records before they are lodged.
For more information visit ato.gov.au/rental
“We continue to see shifts in the way Aussies are working, and it’s important to consider whether your claims reflect your working arrangements this year.”
The ATO notes that while it may be tempting to just copy and paste your prior year’s claims, “We know a lot of people are working back in the office more compared to last year.”
Taxpayers should understand the changes to the working-from-home methods and be able to back up these claims.
Tailored Accounts has provided an outline of the current methods for calculating WFH expenses as well as the new record-keeping requirements for each of these methods.
“To ensure you are meeting your obligations and paying the right amount of tax, you need to calculate a capital gain or capital loss for each asset you dispose of unless an exemption applies.”
Capital gains tax (CGT) comes into effect when you dispose of assets such as shares, crypto, managed investments or properties.
Generally, your main residence will be exempt from CGT. However, if your home is being used to produce income (i.e. running a business from home or renting out a portion of it in Airbnb) CGT may apply.
Taxpayers should be keeping records for:
For more information visit ato.gov.au/CGT
The ATO is committed to supporting taxpayers to meet their obligations and has a range of resources available to help.
If you’re feeling overwhelmed or getting behind with your tax, notify the ATO as early as possible or have a chat with your registered tax agent to find a solution.
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