As technology develops and strengthens, so does the ATO’s scope in finding dodgy deductions. The ATO have recently advised that their data-matching skills have drastically improved over the last couple of years, hence recent warnings issued focused on work related expense claims.
The ATO focus on certain hotspots at tax time to investigate taxpayers who have either accidentally or deliberately made errors. To ensure that you don’t come under ATO scrutiny, we have listed out the key focus areas that the ATO have identified for the current tax season:
– Work-related expenses
– Claims for investment properties.
Below we dive into what this means for you.
Work-related expenses for tax deductions
By all reports the ATO believe claims for work-related expenses have been grossly overstated in prior years and they have mentioned they’ll be closely monitoring these claims this year.
More specifically, they’ll be looking at:
– Deductions for home office use – ensuring these are compliant with the different methods the ATO give.
– Work-related clothing deductions – the ATO have the view that since more people are working from home these should decrease in certain industries.
– Mobile Phone and Internet costs – ensuring that people are claiming a reasonable portion of these bills.
– Union Fees and Subscriptions
– Overtime Meal Claims
– Motor Vehicle Claims – when the cents per kilometre method is used, The ATO believe that with more people working from home less km’s would have been travelled in certain industries.
Property investment claims
The ATO will keep a be keeping an eye on claims made on investment properties and holiday homes, and in particular the below:
– Incorrect interest claims – where the private portion of loans is not accounted for.
– Claiming negative gearing on holiday homes that are not genuinely available for rent. Rental property owners are warned the expenses need to be apportioned for the periods that the property is genuinely available for rent.
– Incorrect capital claims – where the rental property owners are claiming capital works as repairs and maintenance, or are claiming expenses before the property is genuinely available for rent.
Other notable topics to be aware of when completing your 2020 tax return are aw per below:
– If you received the JobSeeker payments, you will not need to enter anything additional in our online platform as we will receive these directly from the ATO.
– If your employer received the JobKeeper payments and included these in your salary, this will already be included on your Income Statement and you won’t need to enter anything additional.
– If you received the JobKeeper payments as a sole trader, you will need enter these in your business income.
– If you lost your job or have had your hours reduced, it may be possible that the tax withheld on your wage may have been miscalculated and could result in a higher refund than normal.
– You will no longer receive a payment summary, instead you will receive an Income Statement. Refer to our article here
– You may be entitled to the low and middle income tax offset if your taxable income is less than $126,000. The base amount is $255, rising to a maximum of $1,080. The actual amount you receive will depend on your individual circumstances, such as your income level and how much tax you have paid throughout the year.
