The end of the financial year is less than two months away, and the Australian Taxation Office (ATO) has revealed which taxpayers will be subject to extra scrutiny.
There’s three key areas this year:
- Landlords
- Those working from home
- Capital gains.
“Within these areas, we have identified common mistakes, and are particularly focused on addressing these and supporting taxpayers and registered tax agents to get their claims right this year,” assistant commissioner Tim Loh said on Monday.
The ATO has given taxpayers their first indication of what not to do this year, after earlier revealing changes to how remote work expenses will be calculated in 2023-24.
The first warning? Don’t merely copy and paste your work-related expenses from last year.
Mr Loh said taxpayers need to be aware of a number of work-from-home (WFH) changes since their last tax return, and ensure they’re recording their expenses using an approved method.
“There have also been some changes in how you calculate things like working-from-home deductions, so don’t be tempted to just copy and paste your prior year’s claims,” he said.
“We know a lot of people are working back in the office more compared to last year.”
Work-from-home changes
As TND has explained previously, you’ll need to provide real-time records of your WFH hours to claim related expenses this year, though there was a grace period that ended earlier this year.
From there, it’s all about determining whether you want to use an actual cost, or the revised fixed-rate method to lodge a claim, accountant and Perigee Advisers principal Lisa Greig said.
“Proof, proof, proof – you have to prove everything you are doing,” she told The New Daily.
“If you can run your work from home like you run your car log, you should be fine, but remember it’s on an actual 52-week basis – it’s not like you can do a 12-weekly one.”
Ms Greig expects many taxpayers who used the 80 cent shortcut method for work-from-home claims during COVID-19 will now be turned off from making expense claims because of the 2023-24 changes.
But those who already had a designated office space in their homes to claim under the actual fixed-cost method previously will fare best switching to the new method, she said.
Landlords on notice
The ATO is also running its ruler over landlords at tax time, with data showing 90 per cent of rental property owners are getting their returns wrong, with income often being left out.
There will be a particular focus on interest expenses, with landlords needing to ensure they correctly apportion loan interest where part of their mortgage was used for private purposes.
“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.
“You can only claim interest on a loan used to purchase a rental property to earn rental income – don’t forget, if your loan also includes a private expense, such as for a new car or a trip to Bali, you can only claim an interest deduction for the portion relating to producing your rental income.”
