ATO boss warns new group to be targeted as tax time approaches

The Australian Taxation Office has warned one group of Australians will be targeted as tax time approaches.

Our lives have changed quite a bit over the past two years, but the ATO has warned one particular group of Australians are not reflecting this change in their tax returns.

It said Australians who drive to work had become accustomed to filing a number of expenses for their car, but that those types of expenses could land them in trouble this year.

In an interview with the ABC, ATO assistant commissioner Tim Loh said it would be looking very carefully at car-related expenses this tax time.

“What we are seeing is people continuing to claim car and travel expenses at pre-pandemic levels,” he said.

“We do expect car and travel expenses to go down quite significantly because if you’ve been working from home, you can’t be at two places at once.”

Crackdown on car-related expenses

According to the ATO, travel to and from work cannot be claimed as a tax deduction but petrol costs for trips to a job-related task can be submitted.

If you are to be audited, you will have to prove to tax officials you used your car for work, and not just to buy groceries or visit your mates.

The ATO is preparing to crack down on Australians who are over-claiming work-related expenses to help with the rising cost of living.

One of the steepest rises in everyday goods is in petrol prices — which have hit record highs in recent months as the war in Ukraine squeezes supplies.

Average unleaded prices in regional areas last week rose by 10.4 cent a litre to 211.3 cents a litre, according to the Australian Institute of Petroleum.

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Many of us have been travelling to work less frequently over the past year. Picture: Lisa Maree Williams/Getty Images

Drivers in capital cities are paying even more with the average pump price rising to 219.3 cents a litre in Brisbane, 220.1 cents a litre in Canberra and 216.4 cents a litre in Sydney.

With the national petrol price at 211.9 cents a litre, CommSec calculated an average Aussie family spent $296.66 a month filling up their car – just shy of the recent record high of $297.50 in May. It means that the average monthly fuel bill has increased by $74.48 compared with the start of 2022.

It’s not just motoring expenses the ATO will be keeping a close eye on.

Mr Loh also singled out rapid antigen tests as an area the ATO would be looking at.

He said Australians who claimed rapid antigen tests on their tax return would also need to prove it was work-related and not for personal use.

“Now with those rapid antigen tests used for work purposes, you need to satisfy three rules: you must have spent the money yourself and not be reimbursed by your employer,” Mr Loh said.

“It must be related for work-related purposes.”

The average monthly fuel bill has increased by $74.48 compared with the start of 2022.

Big change to work-from-home expenses

After the lockdowns of the past 12 months, many of us will be claiming deductions for working from home.

The good news is that, this year, there is still an easy system in place for working out how much you’re owed.

Since the pandemic began in March 2020, professionals have been able to claim a flat 80 cent-an-hour rate for their expenses instead of having to manually add them up.

The flat-rate was meant to have ended on June 30, 2021 but the tax office extended it for another year as Sydney and Melbourne were put into long lockdowns.

That means you can use it on this year’s tax return, which you have until October 31 to do.

However, a big change is coming from July 1 which means that from the next financial year you will be required to keep your electricity, internet and phone bills and manually add up your expenses to claim a lower 52-cent an hour deduction if you’re working from home.

It basically means that those of us working from home will have to get into the habit of keeping receipts from July 1.

Crypto investors being watched

Cryptocurrencies are also under the ATO’s radar, with about 800,000 Australians investing in them over the past few years.

“We are really focused this year on making sure people understand that when you sell, swap or exchange crypto, there is a taxable transaction,” Mr Loh said. “And also, to make sure that you keep good records.

The ATO is watching crypto investments. Picture: Anthony Kwan/Getty Images

“Crypto isn’t anonymous, we have done a matching protocol with cryptocurrency exchanges and they share that information with us, to allow us the data match.”

You will make a capital gain if the capital proceeds from the disposal of the cryptocurrency are more than its cost base. Even if the market value of your cryptocurrency changes, you do not make a capital gain or loss until you dispose of it.

According to the ATO, if you acquire cryptocurrency as an investment, you may have to pay tax on any capital gain you make on disposal of the cryptocurrency.