Who will the ATO be focussing on this year?
ATO Compliance Targets – Tax 2016
This year, the ATO will be focussing on specific areas of your tax return and making sure that everyone meets all of the relevant legal compliance. The ATO usually announces their compliance target areas before the start of each new financial year, reminding us to double-check our tax claims for both the previous and upcoming Tax Seasons.
So what will be on the ATO’s radar this year? In a nutshell, they will be looking at two main areas: work-related expenses and claims made by investment property owners. This decision comes as no surprise, seeing as work-related claims have been increasing over the past few years, and it is an area where taxpayers often make mistakes or use misleading information.
They will be paying special attention to:
- Car expenses claims for transporting bulky tools
- Work-related travel
- Internet and/or mobile phone usage claims
- Self-education costs
To avoid any unnecessary legal or tax problems, it is vital that you keep track of your work-related purchases, and properly store important documentations, such as receipts, invoices, a logbooks or diaries.
The ATO will also be using data matching software on taxpayer information and third-party sources, to catch individuals who are not declaring income, such as:
- Capital gains tax, from the disposal of shares and property
- Foreign source income
- Contractor income from payments made by government agencies
Other areas that the ATO will be paying close attention to, include those working in the shared economy to ensure that income and expenses are correctly reported. Examples provided by the ATO, include:
- Ride-sourcing; transporting passengers for a fare (such as Uber drivers)
- Renting out a room or house for accommodation (such as Airbnb hosts)
- Renting out parking spaces
- Renting out equipment, such as tools, musical instruments, sports equipment and so on.
- Supplying tools or equipment
- Completing odd jobs for payment
- Providing skilled services; such as web or trade services
According to ATO statistics, over 1.8 million people own an investment property in Australia, so there will be a large focus on deduction claims made in relation to investment properties and holiday homes. This includes:
- Excessive interest expense claims, such as where property owners have tried to claim borrowing costs on the family home as well as their rental property.
- Incorrect apportionment of rental income and expenses between owners.
- Holiday homes that are not genuinely available for rent.
- Incorrect claims for newly purchased rental properties. Expenses that cannot be claimed immediately include, costs to repair damage which existed at the time of purchase, and the costs of renovation.
So this Tax Season, before you make any tax claims or deductions, make sure that you have the paperwork to back it up! It’s essential that you keep an organised and secure record of your receipts, invoices, logbooks and bank statements as a proof of purchase, just in case you are audited by the ATO.
Looking for an Accountant to process your tax return or offer tax advice? Contact us below.
Intuit QuickBooks – Accountants Mount Martha
Sources:
Chapman, M. (2016, June 28). ATO hotspots this year – do they apply to you?. Yahoo7 Finance. https://au.pfinance.yahoo.com/article/-/31937213/ato-hotspots-this-year-do-they-apply-to-you/