Which taxpayers will the ATO be pursuing this year

With tax time just around the corner, it is worth while taking a look at the areas the ATO will be paying attention to this year.

ATO Focus on Work-Related Expense Claims

There has been a steady increase in the amount of work-related deductions in recent years, which has caught the ATO's attention. Specifically, the ATO will be looking at:

• car expenses
• working from home deductions
• splitting of expenses between work and personal use

One of the most-claimed work-related expense each year is a working from home deduction. In 2024 more than 10 million people claimed a work-related deduction, and many of those claimed a deduction related to working from home. In order to claim a working from home deduction, you must be working from home to fulfil your employment duties (not just carrying out minimal tasks) and you must have the necessary records. Remember, if you are using the 70 cents per hour fixed rate method, you can’t separately claim expenses for internet, phone, electricity, or stationery, as these are already included in the hourly rate. 

Each individual’s work-related expenses are unique to their circumstances. If your working arrangements have changed, don’t just copy and paste your prior year’s claims. If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense. For example, you can’t claim 100% of mobile phone expenses if you use your mobile phone to ring mum and dad.” 

ATO Compliance Risks for Rental Income and Deductions 

If you are a rental property owner, make sure you include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain. 

Good record keeping is essential, and you can ask your H&R Block tax consultant for assistance. If the ATO notice a discrepancy it may delay the processing of your refund. The ATO can also ask for supporting documentation for any claim that you make after your notice of assessment issues  

ATO Scrutiny of Capital Gains on Crypto, Property and Shares 

If you dispose of an asset such as property, shares, or a crypto asset, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return. 

Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it. 

Through their data collection processes, the ATO know that many people are buying, selling or exchanging digital coins and other assets. 

Record-Keeping Requirements 

If you organise 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.” 

The ATO will be taking firm action to deal with taxpayers who they feel are gaining an unfair advantage of the rest of the Australian community by overstating their deductions. Your deductions may be legitimate, but if you cannot support the claims with receipts and records if the ATO request these, the claims will be disallowed and penalties may be applied.  

Remember, in order to be able to claim a deduction for an expense: 

• 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 that portion that relates to producing income 

• You must have a record to prove it 

ATO Monitoring of Shared Economy Income (Uber, Airbnb, Airtasker)

The ATO will continue to monitor businesses that operate in the  shared economy. Whether it's Uber, Airbnb, Airtasker or any of the other shared economy businesses the ATO will be keeping a close eye to make sure they are compliant.

The ATO has been caught off guard by how quickly the shared economy has grown and as a result, is playing catch-up to avoid being left behind in terms of tax collection.

ATO Compliance Alerts on Small Business Asset Write-Offs in Australia

With the much welcomed small business asset write off, the ATO was quick to spot the potential for abuse. Warnings have been issued to businesses not to abuse the generous rules by claiming assets used privately. Once small business owners start submitting their returns claiming asset write offs, the ATO will be paying close attention.

To save yourself the hassle of having the ATO chase you, it is important to ensure all your ducks are in a row. Head into your local H&R Block branch for friendly, professional tax advice that could save you a whole lot of trouble later.