ATO targets investments, work from home claims this tax time

Investors in shares, property and crypto currencies are on the Australian Taxation Office (ATO) priority watch list for tax time 2022.

The ATO will look closely at rental property income and deductions; and capital gains from crypto assets, property and shares.

Taxpayers are also urged to get their affairs in order well before they file returns, with record-keeping and claims for work-related expenses in the ATO sights.

ATO assistant commissioner Tim Loh said the tax office would target problem areas “where we see people making mistakes”.

“We know there is still some weeks left until tax time,” he said. “But starting to organise the income and deductions records you’ve kept throughout the year will guarantee you a smoother tax time and ensure you claim your entitled deductions.

“For those people who deliberately try to increase their refund, falsify records or cannot substantiate their claims, the ATO will be taking firm action to deal with these taxpayers gaining an unfair advantage over the rest of the Australian community doing the right thing.”

Aero Group founder Justin Wong said it was not unusual for the ATO to target these areas.

He said the tax office would be looking at prior years as the pandemic tailed off so “be on your best behaviour and have your documents ready for tax time”.

Some people have changed to a hybrid working environment since the start of the pandemic, which has seen one in three Aussies claiming working from home expenses in last year’s tax return.

“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,” Justin said.

“If your working arrangements have changed, don’t just copy and paste your prior year’s claims. If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense.

“Don’t claim what you aren’t entitled to. Make sure you have documents to prove you’ve incurred the expense. Don’t just put a figure down and assume that because it’s below a certain threshold they won’t check. The reality is, if you haven’t got a receipt, don’t claim it.”

Extra care is required by investors to ensure profits or losses are reported on their returns, noting crypto losses cannot be offset against salary and wages.

If you dispose of an asset this financial year such as property, shares or crypto, including non-fungible tokens (NFTs), you will need to calculate a capital gain or capital loss and record it in your tax return.

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

“Through our data collection processes, we know many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations.”

The ATO is asking rental property owners to make sure they include all income received from rent in their tax returns, including short-term rental arrangements, insurance payouts and retained rental bonds.

“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,” Mr Loh said.

“As all rental income and deductions need to be entered manually, you can ask your registered tax agent for assistance.”

Mr Wong wasn’t surprised the ATO was looking at investment properties.

“It’s important to be honest about when the property was rented. The ATO has all the information on bonds and rental agreements, it wouldn’t take them long to find out if you’re claiming what you shouldn’t.

“However, that shouldn’t put off people from claiming what they are entitled to. The ATO is only after dishonest people.”