ATO Announces Four Areas of Focus for Taxation This Year

The Australian Taxation Office has uncovered four key areas to focus on as businesses prepare for their tax this year. Being aware that many Aussies are engaging with cryptocurrencies or digital assets, the tax office said that crypto investors will be one of their priorities at tax time. It is critical for people to understand how cryptocurrency affects their taxes so they can correct their tax reporting.

ATO TO FOCUS ON CRYPTO TAXATION

​ATO announces crypto investors as one of the areas of focus at tax time.

Those who sell their digital assets including NFTs (non-fungible tokens) must compute and record their capital gains or losses in the tax returns.

4 KEY FOCUS AREAS AT TAX TIME

The four priority areas are:

• record-keeping

• work-related expenses

• rental property income and deductions, and

• capital gains from crypto assets, property, and shares

Assistant Commissioner Tim Loh said that it is important to reconsider claims and make sure to satisfy the three golden rules:

1. You must have spent the money yourself and weren’t repaid.

2. If the cost is for a mix of investments and private use, you can only claim the percentage that relates to investments of income-producing property.

3. You should have a record to prove it.

Recordkeeping

The ATO understands that there are still a few weeks left until tax time. But if individuals start putting together their income and deduction records that they kept throughout the year, this will promise a smoother taxation. This will also guarantee that they can claim the deductions they are qualified for.

For those individuals who purposely attempt to build their refund, falsify records or cannot validate their claims the ATO will be making a decisive move to manage these taxpayers who are acquiring an unjustifiable benefit over the rest of the Australians who are filing their taxes right.

Lodge Your Tax Return Right

ATO Assistant Commissioner Tim Loh said that they frequently see errors in July because people are in rush to lodge their tax returns. People usually forget to include interest from banks, dividends, compensation from other government offices and private health insurers.

According to Mr. Loh, this information will be automatically pre-filled in the tax form for most people toward the end of July. This will make the taxation process smoother, save time, and get the tax form right.

For those people who want to lodge their tax return prior to the end of July, they should manually put all their income and that will take extra time on their part.

1. Check if your employer has marked your income statement as ‘tax ready’.

2. Check if your pre-fill is accessible in myTax before you lodge.

Once these are made before lodging tax return, there will be no amendment or alteration afterward. And this could not result in any delays to refund.

Remember that during tax time, the pre-fill information and the status if you are ready to lodge can be accessed through the ATO app.

However, ATO doesn’t pre-fill all of the information about rental income, foreign sourced income and capital gains events involving shares, crypto assets or property even if they receive and match a lot of information about this data.

Work-Related Expenses

Certain individuals have changed to a hybrid workplace model from the beginning of the pandemic. Only one of every three Aussies claims ‘working from home’ expenses in their tax return last year.

The ATO said that they would expect to see a decrease in car, clothing, parking, toll and other work-related expenses if the person continued to work from home.

There are three ways to claim a deduction for ‘working from home’ expenses depending on different situations. As long as you meet the eligibility and recordkeeping requirements, you can choose among the following methods:

1. Shortcut (all-inclusive)

2. Fixed-rate

3. Actual cost

Each person’s work-related expenses vary based on circumstances. Do not copy-paste previous year’s claims if working arrangements have changed. In the event that the expense was utilised both for business/work-related and private use, only the work-related portion of the expense will be eligible for claims. For instance, you can’t claim 100% of the expenses used for a mobile phone if you use it to call your parents.

Rental Income and Deductions

For rental property owners, make sure to put all the income from rental in the tax return. This includes short-term rental arrangements, insurance payouts as well as rental bond money you recollect.

Numerous rental property owners use a licensed tax agent to help with their tax affairs. ATO urges rental property owners to keep good records of all their rental income and deductions because these are not pre-filled. They should enter the information manually or they can ask assistance from their licensed tax agent.

According to ATO, in case they see a discrepancy in the information submitted, it may affect the processing of refund. The ATO will contact rental property owners or their licensed tax agent for the correction of tax return. Supporting documents are required for any claim after the notice of assessment issues.

Capital Gains from Crypto-assets, Property and Shares

When you dispose of an asset like property, shares, or a crypto-asset, including NFTs (non-fungible tokens) this financial year, you should compute a capital gain or loss and include it in your tax form.

For the most part, a capital gain or capital loss is the difference between what an asset charges you and what you get when you dispose or sell.

Crypto is so popular and the ATO expects to see more capital gains or capital losses of digital assets reported in tax returns this year. Crypto investors can’t counterbalance their crypto losses against their compensation and earnings.

Through the government’s data collection processes, the ATO knows that many Australians are buying, selling and exchanging digital coins and assets. Putting crypto’s capital gains and losses for taxation is important and can help people to understand their tax obligations.

YOUR NEXT STEP

If you have investments in rental property or crypto, please complete our rental property and crypto 1 page for checklist and pre book with an investment accountant specialist or secure your appointment.

If you did dispose of any assets during the financial year, it is imperative to prepare your documents on cost and disposal of assets.

If you want more tax efficiency in your financial portfolio, please book in your investment tax planning with our tax and financial planning specialist Lan Nguyen to review your overall wealth strategy.

VALUE TO YOU

On average we improve tax efficiency for our investors and on average saves an investor $8800 whilst they also have an asset protection strategy in place for accumulating wealth.

OUR PRICING

Tax planning sessions for a couple is 750 plus GST.

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