ATO hit list: What the tax office is cracking down on this year

There are a few key things on the ATO's hit list this tax time. (Source: ATO/Getty)

It’s almost time for Aussies to start lodging their tax returns and the Australian Taxation Office (ATO) has a few key things on its hit list.

Assistant commissioner Tim Loh said the ATO was continuing to prioritise areas where it often saw mistakes being made.

Here’s a roundup of what will be under the microscope this year.

• Also read: 4 tips to maximise your tax return before June 30

• Also read: ATO’s tax-time warning: ‘We will track you down’

• Also read: ATO reveals the top 10 highest paid jobs in Australia

Work-related expenses

The ATO will be focused on making sure taxpayers understand the changes to work-from-home deductions, and can back up their claims.

Taxpayers can now use the actual cost, or the revised fixed-rate method to claim work-from-home deductions. You can no longer claim the shortcut method (80 cents per hour) that applied in previous years.

The fixed-rate method rate has increased from 52 cents per hour to 67 cents per hour for the 2022-23 income year onwards. It covers things like energy expenses, phone usage, internet, stationery and consumables.

There are also changes to the record-keeping requirements. From March 1, 2023, you now need to keep a record of all the hours worked from home for the entire income year.

Estimates or a four-week representative diary wouldn’t cut it anymore, the ATO said. Instead, you’ll need to keep records as they occur, such as timesheets, rosters, logs of time spent accessing employer or business systems, or a diary for the full year.

Here’s a rundown of the work-from-home changes, plus tips, and traps to watch out for.

Landlords

Rental-property deductions are also under the microscope, after the ATO found nine in 10 rental-property owners were getting their return wrong.

The ATO said it would be particularly focused on interest-expense claims. You can only claim interest on a loan used to purchase a rental property to earn rental income.

If the loan also includes private expenses, such as a car, you can only claim an interest deduction for the portion related to your rental.

Capital gains tax

Capital gains tax kicks in when you dispose of assets, such as shares, crypto, managed investments or properties.

To make sure you are meeting your obligations and paying the right amount of tax, you need to calculate a capital gain or capital loss for each asset you dispose of unless an exemption applies.

The ATO warned Aussies not to fall into the trap of thinking it wouldn’t notice if you sold an asset for gain and didn’t declare it.

Side hustles

As well as these three key focus areas, the ATO has warned Aussies to declare any income they earn from a side hustle or gig-economy work.

If you are earning money through repeated activities for the purpose of making a profit, then it’s likely you are running a business.

If you are running a business, there are a number of obligations you need to meet, including registering for an Australian Business Number, keeping the right records and lodging the right type of tax return. You may also need to register for the goods and services tax (GST).

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