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ATO reveals 2022 hit list: What to watch this tax time

·Personal Finance Editor
·6-min read
A sign and logo for the Australian Taxation Office (ATO).
The ATO has revealed four key focus areas for this tax season. (Source: Getty)

The Australian Taxation Office (ATO) has announced its 2022 tax-time hit list, with four key focus areas.

The four pillars the ATO will be focusing on are:

  • Record-keeping

  • Work-related expenses

  • Rental property income and deductions

  • Capital gains from crypto assets, property and shares

ATO assistant commissioner Tim Loh said the ATO was targeting problem areas where it saw people making mistakes.

"It’s important you rethink your claims and ensure you can satisfy the three golden rules,” Loh said.

  1. You must have spent the money yourself and weren’t reimbursed

  2. If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income

  3. You must have a record to prove it

Director of Tax Communications at H&R Block Mark Chapman said it was no surprise what made the ATO’s hit list this year.

“The ATO has released its Tax Time hit-list for this year, and it confirms our prediction that work-related expenses, rental properties and cryptocurrency are all well and truly on the compliance radar,” Chapman said.

Record-keeping

For those people who deliberately try to increase their refund, falsify records or cannot substantiate their claims, the ATO warned it would be taking firm action.

Loh said the ATO was keeping an eye out for those taxpayers who were gaining an unfair advantage over the rest of the Australian community who were doing the right thing.

“We know there are 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,” Loh said.

Side view of female hand typing on laptop keyboard. Freelancer working with laptop at cafe. Technology and flexible working.
It is important to keep thorough records of your expenses. (Source: Getty)

Lodge right, no worries

Loh said the ATO often saw a lot of mistakes in July as people rushed to lodge their tax returns and forgot to include interest from banks, dividend income, payments from other government agencies and private health insurers.

For most people, this information will be automatically pre-filled in their tax return by the end of July.

“You can check if your employer has marked your income statement as ‘tax ready’ as well as if your pre-fill is available in myTax before you lodge,” Loh said.

“That way, an amendment doesn’t need to be made later, which could result in delays to your refund.”

Available pre-fill information and readiness to lodge can be easily checked in the ATO app this tax time.

“While we receive and match a lot of information on rental income, foreign-sourced income and capital gains events involving shares, crypto assets or property, we don’t pre-fill all of that information for you,” Loh said.

Completing deduction section in Australian tax form, shot with macro probe lens
The ATO said it is important not to leave your tax return until the last minute. (Source: Getty)

Work-related expenses

“Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working-from-home expenses in their tax return last year,” Loh said.

“If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls.”

To claim a deduction for working-from-home expenses, there are three methods available, depending on your circumstances.

You can choose from the shortcut (all-inclusive), fixed rate and actual cost methods, as long as you meet the eligibility and record-keeping requirements.

“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,” Loh said.

“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 per cent of mobile phone expenses if you use your mobile phone to ring Mum and Dad.”

You can easily keep track of your expenses with the myDeductions tool in the ATO app. Just take a photo of the receipt in the app, record the details of the expense and at tax time, simply upload the information directly to your return in myTax or email it to your registered tax agent.

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, Loh said.

“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,” he said.

“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.”

For more information visit ato.gov.au/rental

A for lease sign out the front of an apartment complex to indicate the home is available for rent.
Those who own an investment property will need to tell the ATO about all the income they received from that property. (Source: Getty)

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 received when you disposed of it.

“Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year,” Loh said.

“Remember you can’t offset your crypto losses against your salary and wages.

“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.”

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