With tax time fast approaching, the Australian Taxation Office has revealed the hotspots it will be focussing on when it reviews your claims, and workers and investment property owners had better be prepared.
The ATO has claimed there’s a $8.7 billion shortfall between the tax people are expected to pay and the tax they’re actually paying, and it believes work-related expenses are where it’s all going sour.
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As a result, they’re looking at claims for work-related clothing, like dry cleaning and laundry expenses, and they’ll be putting the spotlight on taxpayers who take advantage of the exemption from keeping receipts for those claims under $150.
If you make deductions for home office use, including claiming for “occupation” costs like rent, rates and mortgage interest, the ATO will similarly be keeping an eye on you if you’re not actually running a business from home.
Union fees and subscriptions, overtime meal claims, mobile and internet costs will also be put under the microscope.
I claim these things, what can I do to make sure I’m on the safe side?
H&R Block’ says these areas are often where taxpayers simply make mistakes, and it’s not easy when the ATO gives pretty vague advice on how the law actually works.
Their top tip?
Just be confident that you understand what you can and can’t claim, and that you have proof that you’ve actually incurred those expenses, like invoices and receipts.
What other hotspots are there?
Errors in rental property claims is the second biggest contributor to the $8.7 billion tax gap, with the ATO finding errors in almost all (90 per cent) returns reviewed.
So, if you’re making excessive interest expense claims, or incorrectly portioning rental income and expenses between owners, the ATO has you on its list.
They’ll be looking at holiday homes that aren’t genuinely available for rent, and keeping a close eye on incorrect claims for newly purchased rental properties.
This is me too, what do I do?
Again, H&R Block says it’s all about keeping good records.
“The golden rule is; if you can’t substantiate it, you can’t claim it, so it’s essential to keep invoices, receipts and bank statements for all property expenditure, as well as proof that your property was available for rent, such as rental listings,” they said.
The ATO will be taking a closer look at investments in cryptocurrencies like Bitcoin, because traders can be taxed on their profits as business income.
It’ll be pulling records from Australian cryptocurrency designated service providers to ensure people trading are paying the right amount.
Those working in the shared economy will also be under the spotlight, as the ATO looks to ensure income and expenses are correctly reported.
This means anyone ride-sourcing, renting out rooms or houses for accommodation (like Airbnb), renting out parking spaces or completing odd jobs and providing skilled services (like Airtasker workers) will be under their watch.
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