ATO warns workers and investors of tax time scrutiny

Home office biscuits are among the dodgy deductions that the Australian Taxation Office will be looking for this year. See what else made the list.

The Australian Taxation Office has sharpened its focus on work-related expenses, rental properties and investment gains on shares and cryptocurrencies as it aims to stop dodgy deductions and incorrect claims.

Two months out from the end of financial year, ATO assistant commissioner Tim Loh says some confusion remains about what can be claimed by people working from home.

He said the ATO expected a significant fall in car, travel and laundry deductions this financial year, with 41 per cent of Australians still working from home at least one day a week in February.

“One thing we do see people doing is claiming private expenses, things like biscuits, coffee and tea that maybe your employer supplies when you’re in the office – if you incur the cost at home it’s not deductible,” he said.

“We don’t want to see Tim Tams as a tax deduction in your return.”

The Australian Taxation Office is data matching more transactions than ever.

Rising sharemarkets and property prices, along with skyrocketing bitcoin and other cryptocurrencies, are driving an increase in Australians’ capital gains.

Mr Loh said cryptocurrency transactions were taxable when traded or gifted by investors, swapped with other cryptocurrencies, converted to regular money or used to obtain goods or services.

Rental properties, including holiday homes and short-term rentals through Airbnb and other accommodation platforms, are another key ATO focus.

“We want to make sure people are including that income in their tax return,” Mr Loh said.

“We have got all that information from Airbnb and state revenue offices and are using that to data match with taxpayers’ tax returns.”

H&R Block director of tax communications Mark Chapman said the ATO’s data matching capabilities had improved and now included transactions on cryptocurrency exchanges.

“You really do need to get it right because the chances are the ATO will know about it anyway through all these third parties,” he said.

The ATO introduced a temporary working-from-home tax deduction last year of 80c per hour worked at home during the pandemic.

H&R Block’s Mark Chapman says you must substantiate your deductions. Picture: Supplied

This is an alternative to its existing actual cost method, where detailed records are required, and its 52c-an-hour fixed rate method that allows people to separately claim phone and internet expenses, computer consumables such ink, and depreciation of equipment such as computers.

Mr Chapman said workers the new 80c-an-hour shortcut method was unlikely to deliver the biggest tax deductions.

“A lot of people assume it must be the best method because it’s higher than the 52c rate, and the don’t understand with the 52c rate you can also claim phone, internet and other costs on top of it,” he said.

People caught cheating on their tax returns can face audits, fines and penalty interest.

“It’s all about not over-claiming – just claim what you’re entitled to, and have receipts and other substantiation,” Mr Chapman said.

THE ATO IS WATCHING:

• Capital gains from selling shares, property and cryptocurrency

• People copying last year’s deductions despite changing work circumstances

• Incorrectly claiming private expenses as work-related deductions

• Omitting rental income from all types of property, including accommodation sharing platforms