ATO Priorities This Tax Time
The ATO has released four key areas they will be focusing on for Tax Time 2022.
These areas are:
record-keeping
work-related expenses
rental property income and deductions; and
capital gains from crypto assets, property, and shares.
There are 3 golden rules that must be satisfied in order to claim a deduction:
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 can only claim the portion that relates to producing income.
You must have a record to prove it.
Record-Keeping
It is extremely important to keep copies of your records for your claims for 5 years from the date you lodge your tax return. Records may include income statements, payment summaries and receipts. These records will be useful when preparing your tax return and can also be used as evidence of your income and expenses.
If you incur expenses that you use partly for private purposes, you must have records to show how you worked out the part of expenses that you incur in earning assessable income. For example, if you use your motor vehicle for both business and private usage you should prepare a logbook to document the proportion incurred in earning assessable income.
Work-related expenses
As a result of COVID-19, some people have changed to a hybrid working environment.
There are three methods available to work out your working from home expenses:
Fixed Rate Method
52c per work hour plus additional expenses incurred not covered by the fixed rate.
Actual Cost Method
Deduction for the actual expenses incurred as a result of working from home not covered by the fixed rate method.
Shortcut Method
80c per work hour (only available from 1 March 2020 to 30 June 2022).
From 1 July 2022, if you are continuing to work from home it is important that you keep a record of expenses incurred as a result of this as the shortcut method will no longer be available.
The ATO has advised, if you are claiming work-from-home expenses, they expect to see a reduction in car, clothing and other work-related expenses such as parking and tolls.
Other work-related deductions
You may be able to claim a deduction for other work-related expenses that you incur that directly relate to your work or your income producing activities, such as:
Travel expenses
COVID-19 test expenses
Phone, data and internet expenses
Seminars, conferences and training courses
Tools, equipment and other assets
Transport expenses
Union Fees
Rental Income and Deductions
If you own a rental property, it is important that you keep records of all income and deductions. The ATO has advised that if they notice a discrepancy it may delay the processing of your refund as they may need to contact you for supporting documentation.
Capital gains from crypto assets, property and shares
If you dispose of an asset such as crypto, property or shares, you will need to calculate a capital gain or loss and record it in your tax return.
Cryptocurrency capital gains are extremely complex to calculate as you are required to know the AUD value of the currency at the exact time of purchase (to the second) and sale. To assist, please contact your Kamper accountant as we have a program to calculate this for you.
It is important to note, that through data collection processes, the ATO knows if you have exchanged digital coins or assets, so they are easily able to identify if this has not been reported correctly.