26 September 2023

ATO reveals tax-time hitlist

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David Adams* says the ATO will be cracking down on dodgy WFH claims and capital gains errors.

The Australian Taxation Office (ATO) has revealed its priority hit-list for the end of financial year period, reminding workers and businesses to stay on top of their work-related expenses and potential capital gains requirements.

In a new statement, ATO assistant commissioner Tim Loh reminded taxpayers of major changes to work-from-home (WFH) expense deductions this tax season.

In February, the ATO revamped how it assesses WFH deductions, including the ‘fixed rate’ method covering the cost of phone bills, internet usage, and electricity expenses incurred while working at a home.

Under the new ‘fixed rate’ formula, taxpayers can claim a deduction of 67 cents per hour worked from home, up from 52 cents.

Major purchases like laptops or new office furniture can be claimed separately, along with home-office cleaning costs and relevant equipment repair fees.

However, taxpayers hoping to take advantage of boosted ‘fixed rate’ deductions must keep a diary detailing every hour worked from home past March 1 this year.

Australians should “not be tempted to just copy and paste your prior year’s claims,” Loh said.

“We know a lot of people are working back in the office more compared to last year,” he continued, maintaining that keeping “good records will give you flexibility to choose the right method that suits your circumstances and gives you the best deduction this tax time”.

Capital gains tax (CGT) is also a focal point this year, Loh said.

While the ATO statement is primarily the disposal of property used to generate income through short-term accommodation platforms like AirBnB or Stayz, the tax office reiterated that entrepreneurs running a business from home should keep a close eye on their obligations.

A raft of small business CGT exemptions are on the books, yet the ATO statement suggests too many founders are playing fast and loose with the rules.

“Don’t fall into the trap of thinking we won’t notice if you sell an asset for a gain and don’t declare it,” Loh said.

Landlords are the third priority point, with the ATO claiming 9 in 10 rental property owners mismanage their tax returns.

New data-matching capabilities will help the tax office compare tax returns to residential investment property loan data, making it harder for taxpayers to overclaim.

“This is just one example of the work we are doing to help you get your return right and make sure people are claiming expenses correctly,” Loh said.

*David Adams is a senior business journalist at SmartCompany.

This article first appeared at smartcompany.com.au.

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