Four areas ATO is cracking down on this tax season

The ATO has outlined the major areas it will be targeting, shooting a specific warning to people who are claiming work from home benefits.

The Australian Taxation Office (ATO) has revealed four key areas it will target this financial year as tax season approaches.

The office will be focusing on record-keeping, work-related expenses, rental property income, deductions and capital gains - with an extra focus on those who made money from crypto, property and shares.

The ATO will also be focusing on working from home claims, with millions of Australians working remotely throughout extensive lockdowns in late 2021 and beyond. There are several things someone can claim as an expense for working at home - even something as nuanced as furniture degradation - but there are limits.

“Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year,” Assistant Commissioner Tim Loh said via Channel 9.

“If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls.

Desks, cabinets, computer screens, bills, cleaning products and even toilet paper can be claimed back on tax.

The ATO is focusing on four major areas this tax season.

“Each individual‘s work-related expenses are unique to their circumstances,” Loh continued.

“If your working arrangements have changed, don‘t just copy and paste your prior year’s claims.

“If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense.

“For example, you can‘t claim 100 per cent of mobile phone expenses if you use your mobile phone to ring mum and dad. ”

The Australian Taxation Office offers a “shortcut method” of 80 cents per hour for working from home deductions, but the catch all systems means you could be missing out.

Alternatively, you can use the ATO’s existing flat rate allowance for working from home of 52 cents per hour that could deliver more in returns.

The ATO will be keeping a special eye on Australia’s working from home claims this year.

If you claim using the 80 cents per hour formula, you will need to keep a record of the number of hours you have worked from home. But you can’t make any other claims in relation to working from home, so items like mobile phone and internet usage are included in the 80 cent rate.

The flat rate allowance for working from home of 52 cents per hour covers the extra costs of heating, cooling, lighting and the decline in value of furniture.

The assistant commissioner highlighted the “three golden rules” of a successful tax return, reminding that taxpayers must have spent the money you are claiming back yourself and not been reimbursed. He also pointed out that Aussies can only claim the work portion of an expense, such as a phone bill, and you must have a record to prove it.

Crypto earners told to prepare

The cryptocurrency phenomenon has well and truly made its way to Australia in recent years, but residents should be wary of what they can and can’t do with their new, rapidly fluctuating assets.

Assistant Commissioner Loh has warned crypto investors to keep detailed records of their gains and losses after selling digital assets, including coins and non-fungible tokens (NFTs).

“Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year. Remember you can‘t offset your crypto losses against your salary and wages” Loh continued.

“Through our data collection processes, we know 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.”

The ATO has recommended Aussies holding crypto to keep detailed recordings of their capital gains and losses.

He advised Australians to start thinking about their tax now to avoid the stress – or financial penalty – of a late or incorrect return.

“We know there is 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.