ATO Tax Crackdown – What You Need to Know Before You Lodge Your Next Tax Return

Understand what you can and can’t claim in your next tax return

The Australian Taxation Office is warning it will be taking a tougher approach on tax returns this year, so it’s worth noting some of the things it’ll be cracking down on. Here are 5 things that might affect what you claim:

What are the main things the ATO is on the lookout for?

Benchmarking

The ATO compares all tax returns and has benchmarks that are based on tax returns lodged in your job category. When comparing your tax return to others in your category, the ATO looks for outliers – those whose expenses are high compared to the average. Tax accountants see this noted on their ATO account and if this is the case then we will discuss this with you when completing your return.

Pandemic work from home expenses

Last year, nearly 44% of incorrect claims involved work-related expenses that were not directly related to earning income, which cost the ATO nearly $4 billion. If you’re working from home expenses have increased significantly due to the pandemic the ATO are becoming suspicious if your travel expenses have also increased – how can you be working from home and travelling?

Cryptocurrency

The ATO’s improved data matching capabilities means they are now more easily made aware of cryptocurrency held by individuals. Last year, they announced they would begin writing to individuals that had not included this in their 2021 returns, and this will continue to be a focus in 2022. This tighter scrutiny means it's more important to maintain accurate record-keeping and ensure you’re reporting gains, losses, and whether your crypto assets are used as investments or for business.

Rental property expenses

The ATO has noticed rental property expenses are increasing and have warned that they are cracking down on property investors and ensuring they have receipts for all the expenses that are being claimed.

Generally, documents related to claimed expenses must be kept for 5 years after you have lodged your return. In the case of a rental property, you must keep documents for 5 years from the last lodged return with that property included. That means if you don’t sell your property for another 20 years, you need to keep those receipts for 25 years!

Gig Economy Income

Your taxable income includes any additional income you earn from platforms like Uber, Airtasker, or AirBnB. The ATO is able to data-match additional income received from these platforms, therefore it is important that you not only track your income and related expenses but include it in your tax return.

Remember: if you’re an Australian Resident, any of the income that you have received from worldwide sources should also be included in your Australian return.

Just remember the ATO's 3 golden rules for claiming work deductions

• You must be the one who paid the expenses, and your employer has not refunded you
• The deduction must be related to work earnings
• There must be a record (receipts) to support your deduction claims

Need help understanding your tax obligations this year?

If your circumstances have changed in the last year, you’ve increased some of your expenses, or just need some guidance on what you are eligible to claim as taxable income or as a deduction for your next tax return, the team at YOUtax are ready to help you! Our agents are up to date and will be able to guide you through the completion of your tax return.