The four things the ATO is cracking down on during tax time

ATO tax wash sales

ATO Assistant Commissioner Tim Loh. Source: Australian Tax Office

Cryptocurrency gains, work-from-home deductions, rental income, and record keeping are the four areas in the Australian Taxation Office’s (ATO) sights as we approach the end of the financial year, taxpayers are being warned.

As we finish up the second full financial year in a hybrid working world, assistant commissioner Tim Loh reminded taxpayers that their tax returns may look different than in the years prior to the pandemic.

“Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year,” he continued.

“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.”

Loh continued that there are three golden rules people should think about when lodging their tax returns:

  1. The taxpayer was not reimbursed for an expense by their workplace;
  2. The expense is divided between work and personal use (where personal is not tax deductible);
  3. The taxpayer has a record to prove it.

“For example, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad,” Loh explained.

And there’s no time like the present to get started on your return, Loh says, with common last-minute errors including taxpayers forgetting to include bank account interest accrued, dividend income, and payments from other government agencies and private health insurers.

“We know there is still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to,” he said.

With cryptocurrency surging in popularity during the last 12 months, taxpayers have also been warned any capital gains or capital losses from coins or a crypto asset like non-fungible tokens must be included in their tax return.

The ATO estimates between 500,000 and 1 million Australians have traded cryptocurrency in some capacity to date.

“Remember you can’t offset your crypto losses against your salary and wages,” Loh said.

And the ATO will be watching, with data collection processes keeping track of the buying and selling of digital coins and assets.

Indeed taxpayers out to dupe the system to increase their refund (like falsifying records or using unsubstantiated claims) have been reminded that harsh penalties apply.

It comes after the ATO confirmed last week it was investigating an $850 million scam where more than 40,000 taxpayers claimed GST refunds for non-existent businesses.

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