Crypto, property in taxman's crosshairs
The Australian Taxation Office (ATO) has announced four key areas it would be focussing on for tax returns this year.
Target areas include any profit from investments in cryptocurrencies, claims relating to working at home (expected to be a hot area after the pandemic lockdowns), record keeping and expenses against rental properties.
ATO Assistant Commissioner Tim Loh said mistakes were common when claiming deductions for these areas of income and that assessors would apply the so-called “three golden rules” to every return.
These are:
You spent the money yourself and were not reimbursed.
For any expense that was a mix of work and private use, only the income portion was claimed. A mobile phone or car are common examples of where this rule applies.
Proof of the expenditure has been recorded.
He also said cryptocurrencies would be top-of-mind with the ATO this year.
“Crypto is a popular type of asset, and we expect to see more gains and capital losses reported in returns this year,” Mr Loh said. “We know many Aussies are buying, selling or exchanging digital coins and assets, so it's important to understand the tax obligations.”
The ATO said if an asset was sold, such as a digital coin or non-fungible token (NFT), the capital gain or loss must be recorded in the tax return.
“You can't offset your crypto losses against your salary and wages,” Mr Loh warned.
Confusion is also likely around working from home, he said. A third of Australians claimed work-from-home expenses in their previous 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,” Mr Loh said.
“Each individual's work-related expenses are unique to their circumstances. If working arrangements have changed, don't just copy and paste your prior year's claims.”
Property investors have also been put on notice.
“Make sure you include all the income you've received, including short-term rental arrangements, insurance payouts and rental bond money that you have retained,” Mr Loh said. “If we notice a discrepancy, it may delay the processing of your refund as we may contact you or your tax agent.”
Mistakes are common in tax returns if people file them in a hurry. Bank interest, dividend income, and payments from government and private health insurers are often forgotten.
However, the ATO said this information will be automatically pre-filled in their tax returns by the end of July.