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The Australian Taxation Office (ATO) announced four key focus disciplines for Tax Time 2022.

The ATO will be zeroing in on:

  • record-keeping
  • work-related expenses
  • rental property deductions and income, and
  • crypto-assets, property, and shares capital gains.

Background – tax time

These ATO priority areas will ensure appropriate scrutiny on the correct reporting of deductions and income so that Australia continues to have a substantial tax system that can subsidise the Australian community. Taxpayers can act to lodge right the first time.

Assistant Commissioner Tim Loh explained, “The ATO targets problem areas where we see people making mistakes.”

“It’s important you rethink your claims and ensure you can satisfy the three golden rules,” Mr Loh said.

  1. You must have expended the money yourself and not have no reimbursement.
  2. If the expense is for a combination of income-producing and private use, you can only claim the portion related to generating income
  3.  and you must have a record to evince it.

Record-keeping

If you begin organising the income and deductions records you’ve kept throughout the year in the weeks leading up to the end of the financial year this will covenant a smoother tax time and ensure you claim the deductions to which you are entitled.

For those who deliberately try to enlarge their refund, fabricate records, or cannot corroborate their claims, the ATO will take firm action to handle these taxpayers who are procuring an unfair advantage over the rest of the Australians who are acting honestly.

Lodge right at tax time

We often see many mistakes made in July as people rush to lodge their tax returns and forget to include dividend income, interest from banks, payments from private health insurers and other government agencies. For most people, this information will be automatically pre-filled in their tax returns by the end of July. Pre-filling will make the tax return process smoother, save time, and get your tax return right. However, if you want to lodge earlier, you must take extra time to add all your income manually.

“You can check if your employer has marked your income statement as ‘tax ready’ and if your pre-fill is available in myTax before you lodge. That way, an amendment doesn’t need to be made later, which could result in delays to your refund,” Mr Loh said.

You can quickly check available pre-fill information and readiness to lodge in the ATO app this year at tax time.

While the ATO receive and match a lot of information on rental income, foreign-sourced income and capital gains events involving crypto-assets shares, or property, they don’t pre-fill all that information for you.

Work-related expenses

Some people have transitioned to a hybrid working environment since the beginning of the pandemic, which last year saw one in three Aussies claiming working from home expenses in their tax return. If you continue to work from home, we expect a corresponding reduction in car, clothing and other work-related expenses like parking and tolls.

Three methods are available to claim a deduction for working from home expenses, depending on your circumstances. You can choose from the shortcut (all-inclusive), fixed-rate and actual cost methods if you meet the record-keeping and eligibility requirements.

Each person’s work-related expenses are distinctive to their circumstances. If your work situation has changed, don’t just repeat your prior year’s claims. If you used your expense for both work-related and private use, you could only claim the work-related segment of the expense. For instance, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring family and friends.

You can easily monitor your expenses with the deductions tool in the ATO app. Simply take a photo of the receipt in the app, record the expense details and at tax time, upload the information directly into your return in myTax or email it to your taxation agent.

For more information, visit ato.gov.au/deductions

Rental income and deductions

If you own a rental property, ensure you include all the income you received from your rental in your tax return, including insurance payouts, short-term rental arrangements, and rental bond money you retain.

Many rental property owners engage a registered tax agent to help with their tax affairs. We encourage you to keep good records, as you must manually enter all rental income and deductions. You can request your registered tax agent’s assistance. If the ATO notice a discrepancy, it may delay the processing of your refund as they may contact you or your registered tax agent to rectify your return. The ATO can also ask for supporting documentation for any claim you make after your notice of assessment issues.

For more information, visit ato.gov.au/rental

Capital gains from property, crypto assets and shares

If you liquidate an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs), during this financial year, you will need to calculate a capital gain or loss and record it in your tax return.

Generally, a capital gain or loss is the difference between what an asset costs you and what you receive when you liquidate it.

Crypto is a popular asset, and we expect to see more capital gains or losses reported in tax returns this year. But remember, you can’t offset your crypto losses against your salary and wages.

“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,” said Mr Loh.

For more information, visit ato.gov.au/crypto

Vogue Advisory Group – we are here to help at tax time

As the end of the financial year approaches, now is the perfect time to reassess your finances and make the most of your hard-earned cash in retirement. Contact us for assistance. We are here to help.

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