What’s on the ATO’s Audit Radar This Year?
It’s that time of year again!
Having spent most of last year delivering COVID-19 stimulus payments in the form of JobKeeper, early access to super and cashflow boosts for businesses, the Australian Taxation Office will be shifting its focus in 2022 to 4 key areas:
Record Keeping:
Keeping good records is vital to ATO review preparation.
By organising the income and deductions you’ve kept throughout the year, you’ll save time, have a much better chance of claiming entitlements, and ensure that the audit process will run much more smoothly.
Regularly back up your records and carefully consider your record-keeping processes – Do you have sufficient documentation? What systems do you have in place to show that you’ve reported and calculated income?
Remember: The ATO will take legal action against you if you try to deliberately increase your refund, falsify records, or are unable to back up your claims.
Work-Related Expenses:
For many of us, the pandemic has completely transformed the way we work. Last year, 1 in 3 adults claimed work from home expenses on their tax return, while other expenses like clothes, travel and business trips are expected to go down significantly.
If you meet eligibility and record-keeping requirements, you can claim work-at-home deductions using one of three methods: shortcut (an all-inclusive rate per work hour), fixed-rate (amount per work hour for additional running expenses, plus expenses not covered by the fixed rate) or actual-cost (actual expenses incurred as a result of working from home).
If your purchase was for both work and home purposes (e.g. mobile phone, laptop, stationery, internet connection), only claim the work-related portion of that expense. So no, you can’t claim all those hours you binge-watched something on Netflix, but you can claim the hours spent in Zoom meetings as part of your work-from-home expenses.
Rental Income and Deductions:
Because rental losses are expected to be much higher than normal this year, due to the major hits rental returns took during the pandemic, the ATO will scrutinise rental income and deductions much more closely.
As a holiday home or rental property owner, it’s important to keep a record of invoices, receipts and bank statements for all property expenditures, and to prove that your property was available to rent at the time, as all rental income and deductions will need to be entered manually.
If the ATO notices any discrepancies in your claim, it might delay the processing of your refund, and you or your registered tax agent may have to provide supporting evidence of your claims after receiving your notice of assessment.
Capital Gains from Crypto, Property, and Shares:
Yes, you do have to claim tax on crypto and NFTs.
The ATO estimates that 500,000 to 1 million people have gotten involved in the crypto craze, with traders able to tax profits as business income.
However, some people believe that crypto-assets are anonymous or that profits are only tax-free or taxable when holdings are cashed back in Australian dollars. Because of this, they fail to declare profits and losses. If you do happen to dispose of crypto, shares or property this financial year, then you’ll need to calculate a capital gain or capital loss and record it in your tax return. The ATO also considers exchanging cryptocurrency for goods or services as a taxable transaction.
It’s also important to note that you cannot offset crypto losses against your salary and wages.