ATO Tax Time Targets for 2024
Written by: Zach Henderson | Marketing + Business Development Team
Tax time is here once again, and we are all sitting quietly waiting to know what the Australian Tax Office (ATO) is going to be focusing on this year.
As the new financial year approaches, so too do the target areas that the ATO is going to be keeping an even closer eye on for when the income tax returns start being processed.
With a focus on areas where taxpayers are accidentally or otherwise making errors, the ATO continues to crack down on many things on the proverbial, ‘hit list’.
Starting with:
- Work-Related Expenses + Working from Home Deductions;
- Rental Properties Income + Deductions; and
- Sharing Economy + Cryptocurrency Assets.
As well as:
- Advice on when to lodge your Income Tax Return.
Work-Related Deductions
The ATO states that:
“In 2023 more than eight million people claimed a work-related deduction, and around half of those claimed a deduction related to working from home.”
The ATO has also claimed there was an $8.7 billion shortfall between the tax individuals were expected to pay and the tax they are paying. They believe that work-related expense claims are the biggest element in that “tax gap” and have signalled that they’ll be looking closely at these deductions in the 2024 tax time, when income tax returns are being lodged.
When making any deductions for work-related expenses there are two methods you can choose from, these deductions can be calculated using:
Keeping good records gives you the flexibility to use the method that best suits you and ensures you’re claiming the right expenses that you are actually entitled to.
If you’re making any deductions for occupation costs like rent, rates and mortgage interest you must be running a business from your home and will not be accepted if you are not. Similarly, the ATO will be keeping a strong eye out for people who claim the entirety, or partial amount, of their own personal mobile bill as ‘work-related’. It’s important to note that claiming the 67 cents per hour working from home rate includes elements such as mobile phone costs, so you cannot claim mobile costs separately.
The ATO is also watching out for people who might be claiming their 85 cents per kilometre rate for journeys up to a maximum of 5,000 km. This has the ATO concerned that taxpayers have been automatically claiming the 5,000kms maximum regardless of the actual amount of their work-related travel.
Working from Home Records
In the previous year, the ATO revised the fixed rate method of calculating a Working from Home (WFH) deduction to broaden what is included, increase the rate, and adjust the records you should be keeping. Meaning, that in this current financial year, you need to have comprehensive records to substantiate your WFH claims as you would for any other deduction.
To make any WFH claims in your 2024 income tax return, you must have records to prove the hours or days you’ve worked from home. This can be something as simple as a diary, calendar or spreadsheet that outlines the times in which you’ve worked from home. As well as any additional costs to working from home such as internet or electricity by supplying a copy of the bills associated.
The ATO introduced the changes from making working from home deductions, which included reporting and producing a “working from home logbook”
Tip:
So, have you already completed your working-from-home logbook for the tax return you want to lodge? If not, download this one we prepared: 2023-24 WFH Logbook.
Missed when these changes came into play? Check out this previous blog we put together, highlighting all of these changes: Changes To Claiming Working From Home Deductions
Want to ensure you’re organised for the new financial year and fill in your logbook as you go? We’ve prepared a new one for you to keep: 2024-25 WFH Logbook.
Rental Property Repairs + Income
The ATO’s data showed that nine out of ten rental property owners were getting their income tax returns wrong and have stated that they will be keeping a close eye on this in 2023, claiming that most landlords are making errors when it comes to claiming repair and maintenance deductions.
“This year we’re particularly focused on claims that may have been inflated to offset increases in rental income to get a greater tax benefit.”
Performing most kinds of general repairs and/or maintenance on your rental property can be claimed as an immediate deduction. However, expenses that are capital in nature, such as initial repairs done on a property you’ve just purchased or home improvements, are not deductible as repairs or maintenance. This means that any cost spent to repair the property’s existing damages at the time of purchase or any renovations you make thereafter, cannot be claimed immediately and instead the deductions for such costs must take place over a number of years.
Rental + Holiday Homes
It remains as an area of focus for the ATO to be on the eye out for holiday homeowners and landlords making deductions across a few key areas.
- Excessive interest expense claims, such as when property owners have attempted to claim borrowing costs on the family home as well as their rental property;
- Incorrect apportionment of rental income and expenses between multiple owners. Deductions are being made from the owner with a higher taxable income, however, these must be split between both owners; and
- Holiday homes that are owners claiming for periods where their property was not available for rent. Claims can only be made for properties when being rented or marketed for rent, meaning, that any period of using the property for personal use cannot be claimed.
Sharing Economy
Finally, the ATO will be on the lookout for people within the sharing economy who have been or are not declaring profits and gains.
This includes all people who gain any work through sharing economy platforms such as Uber or any other platforms that allow you to charge for your personal services. The ATO will now be receiving reports from such platforms (including Uber) to catch any data mismatches.
If you rent out your property through a platform such as Airbnb, you are also under the ATO’s watch! Many third-party sources will be supplying data to the ATO to be used to identify if you’re receiving any income from your rental properties to catch any incorrect tax returns.
Cryptocurrency
The ATO will also be keeping a close eye on the cryptocurrency market, with a focus on investments like Bitcoin.
The ATO is trying to catch the people who are jumping ship from Crypto but failing to declare the profits or losses on their investments and potentially avoiding associated Capital Gains made on the profits.
To assist in this endeavour the ATO has begun collecting records from Australian Cryptocurrency Designated Service Providers, that detail both crypto purchase and sale information, to ensure that people trading in Cryptocurrency are paying the right amount of tax. The ATO estimates that anywhere between 500,000 to 1,000,000 Australians have invested in Cryptocurrency to date.
Lodging Your Income Tax Returns at The Right Time
The ATO has begun making warnings against people rushing to make their tax returns as soon as July 1 comes around. If you receive income from multiple sources this especially applies to you!
You will need to wait until your multiple sources of income are pre-filled in your tax return before lodging. Meaning, that when you have interest to include in your tax return from banks, dividend income, payments from other government agencies and private health insurers, you will need to wait until the end of July for this to be pre-filled in your tax return.
By lodging in early July, you are effectively doubling your chances of having your tax return flagged as incorrect by the ATO and also resulting in needing to complete an amended income tax return.
Tax planning is a large part of any individual, sole trader or business’s end-of-financial-year tasks. Want to know how we can help you save some tax? Check out this previous blog we put together: Tax Planning for Businesses, Sole Traders + Individuals.
Canny Group + Your Income Tax Returns
Well, there’s a lot to know when it comes to tax time!
And it’s not exactly easy to make sure everything is done right; however, this is where you’re not alone! Cany Group’s team of accountants are here and ready to help.
This year, we have phone appointments available, Monday to Friday 8am – 7pm and 9am – 11am on Saturday mornings. Better yet, if you prefer to see an accountant in person, just walk into our office at a time that suits you!
Get in touch with our team, to find out how we can help you prepare your income tax return this year and stay off the ATO’s watch list.
