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ATO warns Aussies will get lower tax returns this year

The ATO has warned Aussies against submitting a ‘copy and paste’ tax return.

A composite image of people and the ATO logo to represent tax changes.
Tax time is approaching, but the ATO has warned many Aussies will not get the returns they were hoping for. (Source: Getty / ATO)

The Australian Taxation Office (ATO) has revealed what is on its hit list as we approach tax time.

Rental property deductions, work-related expenses and capital gains tax would be the three focus areas this financial year, the ATO said.

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

“Within these areas, we have identified common mistakes, and are particularly focused on addressing these and supporting taxpayers and registered tax agents to get their claims right this year,” Loh said.

Aussies brace for smaller returns

Loh also warned that Aussies would be getting a small tax return this year or, for some, none at all.

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“We know many people are doing it tough this year. We expect fewer people will receive a refund or may receive smaller refunds than they were expecting, and more may have tax debts to manage,” Loh said.

The ATO said it was committed to supporting taxpayers to meet their obligations, and had a range of resources available to help.

“If you’re feeling overwhelmed or getting behind with your tax, let us know as early as possible or have a chat with your registered tax agent so we can work with you to find a solution. Don’t bury your head in the sand,” Loh said.

Work-from-home changes: ‘Don’t copy and paste’

“We continue to see shifts in the way Aussies are working, and it’s important to consider whether your claims reflect your working arrangements this year,” Loh said.

“There have also been some changes in how you calculate things like working-from-home deductions, so don’t be tempted to just copy and paste your prior year’s claims. We know a lot of people are working back in the office more compared to last year.”

This year, the ATO said it was particularly focused on ensuring taxpayers understood the changes to the working-from-home methods and were able to back up their claims.

To claim your working-from-home expenses as a deduction, you can use the actual cost, or the revised fixed-rate method, so long as you meet the eligibility and record-keeping requirements.

“Keeping good records will give you flexibility to choose the right method that suits your circumstances and gives you the best deduction this tax time.” Loh said.

Rental property deductions: Landlords singled out

The ATO’s review of income tax returns found nine in 10 rental property owners were getting their return wrong, and often saw rental income being left out.

Around 87 per cent of individual rental owners use a registered tax agent to prepare their income tax returns.

“We encourage rental property owners and their registered tax agents to take extra care this tax time and review their records before lodging their return.” Loh said.

Capital gains tax: Have you considered all assets?

Capital gains tax (CGT) comes into effect when you dispose of assets such as shares, crypto, managed investments or properties.

To ensure 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.

“Generally, your main residence is exempt from CGT, however if you have used your home to produce income, such as renting out all or part of it through the sharing economy, for example Airbnb or Stayz, or running a business from home, then CGT may apply,” Loh said.

The ATO has reminded taxpayers of the importance of keeping records of the income-producing period and the portion of the property used to produce income to calculate your capital gain.

“Don’t fall into the trap of thinking we won’t notice if you sell an asset for a gain and don’t declare it,” Loh said.

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