Here’s where the ATO’s focus is this tax time

Tax season is just around the corner, and it's time to gear up for what the ATO has on its radar. From making sure your tax returns are accurate to keeping an eye out for potential red flags, staying informed can help you navigate this season smoothly. So, let's dive into the ATO's key areas of focus this tax time.

Work-Related Expenses: What's Claimable and What's Not

When it comes to work-related expenses, it's essential to know what you can claim and what you can't. The ATO will be scrutinising claims more closely, so make sure you only deduct expenses directly linked to your employment. Personal expenses are expressly excluded. Keep accurate records and receipts to support your claims, and remember that excessive and dubious deductions are likely to raise red flags.

Rental Properties: Reporting Income and Deductions

For those involved in property investment or contemplating renting out a property, it is vital to adopt a transparent approach to claiming deductions. The ATO has identified rental property deductions as an area where taxpayers tend to push the boundaries. To avoid any issues, it is imperative to maintain records, such as rental statements, invoices, and receipts, as evidence for deductions claimed. Ensure that you accurately report your rental income and claim deductions for legitimate expenses and remember, claiming expenses that are private in nature is a no-go.

Cryptocurrency and the Sharing Economy

Cryptocurrency has gained popularity, and the sharing economy continues to thrive, but don't forget that these activities may have tax implications. The ATO has improved its data-matching capability, and therefore platforms which taxpayers may earn income through, such as AirBnB and Uber, are likely to be reported to the ATO.

Additionally, if you have engaged in activities involving cryptocurrencies like Bitcoin or Ethereum, it is crucial to accurately report these transactions. This can be done via tax tracking apps specifically developed for connecting to Cryptocurrency wallets. The ATO treats cryptocurrency as a capital asset for tax purposes (similar to a share), which means that any income generated from holding such assets and any gains derived from disposing of such assets are likely to be subject to taxation.

Maintaining comprehensive records of your crypto activities and seeking advice from your tax professional can help ensure accurate reporting and compliance with tax obligations.

Summing up

By staying informed about the ATO's focus areas, you can ensure that you meet your tax obligations and avoid any unnecessary attention. Remember, accurate reporting and proper record-keeping are key to getting through the tax season smoothly.

If you would like to understand more about best practice for keeping adequate records and what deductions you can and cannot claim, please contact LINK Advisors and we can assist you to optimise your tax deductions this tax time.