Each year the ATO releases the four key areas it will be focusing on for tax time and this year they will be targeting:
- Work-related expenses
- Rental property income and deductions, and
- Capital gains from crypto assets, property, and shares.
“The ATO is targeting problem areas where we see people making mistakes” explained Assistant Commissioner Tim Loh, “It’s important you rethink your claims and ensure you can satisfy the 3 golden rules”.
- You must have spent the money yourself and weren’t reimbursed.
- If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income.
- You must have a record to prove it.
Mr Loh advised that when it comes to record-keeping “We know there is still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to.”
“Each individual’s work-related expenses are unique to their circumstances. If your working arrangements have changed, don’t just copy and paste your prior year’s claims. If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense. For example, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad.” said Mr Loh.
Rental Income and Deductions
If you are a rental property owner, make sure you include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain.
“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually, you can ask your registered tax agent for assistance. If we do notice a discrepancy it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return. We can also ask for supporting documentation for any claim that you make after your notice of assessment issues” Mr Loh said.
Capital Gains from Crypto Assets, Property, and Shares
If you dispose of an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.
Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it.
“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.
When you sell an asset for:
- more than it cost you – you have a capital gain
- less than it cost you – you have a capital loss.
You pay tax on your net capital gains. This is:
- your total capital gains
- less any capital losses
- less any discount you are entitled to on your gains.
There is a capital gains tax (CGT) discount of 50% for Australian individuals who own an asset for 12 months or more. This means you pay tax on only half the net capital gain on that asset.
Some assets are exempt from CGT, such as your home. For more information be sure to check out the ATO website.
Remember, if you need any help or advice, we are just a phone call away.
All the best, Simon.