ATO Tax Time Targets for 2022 Tax Returns
With the new financial year here, our clients are starting to come through our doors and making phone appointments to complete their tax returns to get on the front foot of the 2022 Financial Year and with that, we don’t want to waste any time in letting you know what the ATO is targeting for the 2022 Tax Year.
Each year, the Australian Taxation Office has specific items that they put under the microscope and that they watch closely in the way of tax deductions and this year is certainly no different. This year, there are four main areas that the ATO will be focusing on in this year’s tax return lodgements, they are:
- Record keeping,
- Work-related expenses,
- Rental property income and deductions, and
- Capital gains from cryptocurrency assets, property and shares.
The ATO is targeting these areas, as that is where they see taxpayers making the most mistakes.
According to Assistant Commissioner Tim Log, “It’s important you rethink your claims and ensure that you satisfy the three golden rules”:
- You must have spent the money yourself and weren’t reimbursed,
- If the expense is for a mix of income-producing and private use, you only claim the portion that relates to producing income, and
- You must have a record to prove it.
Correctly Record-keeping Your Financial Records
Keeping accurate records when claiming deductions in your tax return is essential. Deductions need to be incurred in the same year that the tax return is for, you cannot claim a deduction from a prior year just because you “forgot” or “misplaced” it the year before. If you start organising your deductions now, it can make for a smoother tax time and ensure that you are claiming deductions that you are entitled to.
Taxpayers who deliberately try to increase their refund by making false claims or not being able to substantiate their claims will be dealt with firmly by the ATO – make no mistake.
Want to make sure that you don’t put yourself in the ATO’s path for an ATO Audit? Check out this blog we put together to ensure that you are doing the right thing: Don’t Be A Fool + Get Caught Out With An Audit.
The ATO often sees lots of mistakes in July, for those taxpayers rushing to lodge their tax returns. The most common mistakes are missing bank interest, dividends from shares, payments from other government agencies (i.e. Centrelink) and private health insurance details. For the majority of taxpayers, this information generally should be available to automatically prefill their tax return by the end of July. By lodging your tax return right the first time could save you delays in your refund hitting your bank account and avoid having to repay money to the ATO.
Financial Information For Your Work-related Expenses
There has been a big change in some taxpayers working environments during the last few years due to the Covid-19 Pandemic, which can change the work-related expenses that they are entitled to be claiming. One in three taxpayers claimed working from home expenses in last year’s tax return. Whilst some people may still be working from home, others may have a mixture of returning to normal (pre-pandemic) working environments and working from home. If a taxpayer has continued to work from home, either on a part-time or full-time basis, the ATO would expect a decrease in other expenses such as car expenses, parking, tolls and clothing.
The ATO has a “shortcut method” of 80 cents per hour for claiming working from home expenses, this is a catch-all method and means you cannot claim mobile phone, internet and office equipment expenses as well. You can still use the “fixed-rate method” of 52 cents per hour which includes the decline in value of home office furniture and furnishings, heating, cooling and lighting. Using the “fixed-rate method” allows you to also claim phone and internet usage expenses and decline in value of items such as computers and laptops.
For more information on Work-related Expenses, visit the ATO Website here.
Rental Income + Deductions for Your Income Tax Return
Rental property owners need to ensure they include all the income they have received from their rental property, including short-term rental arrangements (Airbnb), insurance payouts and rental bond money.
It is imperative that you keep good records, especially if the property is not rented or available for rent during the course of the year, as this can affect the deductions that you can claim.
Some rental property expenses can be claimed in full, while others may be classified as repairs and maintenance, which can be claimed in full, while others may be considered improvements and claimed over a number of consecutive years. Good record keeping will help you ensure that you are making the correct claims.
For more information regarding Rental Income and Dedecutions, visit the ATO Website here.
Capital Gains Tax from Crypto Assets, Property + Shares
When you sell or dispose of assets, such as property, shares or cryptocurrency assets, this will bring about a capital gains event and the capital gain or the capital loss will need to be recorded in your tax return.
Generally speaking, the capital gain or the capital loss is the difference between the purchase price and the selling price of the asset. However, depending on the type of asset, there could be a range of other facts which can affect your gain or loss.
Cryptocurrency, including non-fungible tokens (NFTs) have become very popular over the last few years and calculating the capital gain or the capital loss can be a tricky calculation. It is vitally important that complete and accurate records are kept for all cryptocurrency purchases, transfers and sales.
The ATO have data collection and matching processes, so they will know when you are buying, selling or exchanging cryptocurrency. If this is not included in your tax return, they will request you review your tax return for missing information or could issue you with an amended assessment.
For more information regarding Capital Gains Tax on Cryptocurrency, visit the ATO Website here.
Canny Accounting – The Accountants Geelong Trust
Canny Accounting has been assisting our clients near and far with their tax obligations for over 60 years. We are well versed in income tax returns and working with you to be able to achieve the best outcome possible when lodging your tax return. We are across all cryptocurrency matters and can help you along the way in your investing journey when it comes to lodging your returns as well as advise on any capital gains tax advice that you may need.
Get in touch with our team to have a chat and lodge your income tax return correctly this new financial year. Want to skip ahead of the cue? Head to our website to book to have your tax return done via a phone appointment at a day and time that best suits you.