You want the latest in tax news, and you’re wanting to know what the latest ATO media release is? Well, it’s all about the latest tax focus points the ATO will be targeting.
Each year, the ATO audits which area they will watch with closer scrutiny. The areas they are likely to focus on include: taxable incomes, your deductions, and what subsidies you are allowed. This year, the ATO will be focusing on:
- Working from home expenses
- Rental cost deductions
- Capital gains from property, shares, and cryptocurrency
If the government is looking at these areas with scrutiny, it means you should be focusing on them double as closely. The best way to make sure you don’t make a mistake is to use an online tax accountant which can guide you through completing your Tax Return simply, quickly & accurately. A free meeting is also available to assist you in completing your Tax Return.
Read the below article to get a heads up on some of the things you need to know and mistakes to avoid.
What is a tax deduction?
A tax deduction is an expense that you spend for a work related reason. When you claim a tax deduction, it helps lower your taxable income. If you lower your taxable income, you don’t have to pay as much tax which means you can spend more money on the things you love. The best way to do this is lodging with an online professional tax agent.
When it comes down to it, there are three main criteria that qualifies an expense for tax deduction:
- You must have spent the money and not have been reimbursed
- It must be related to your job
- You must have a record to prove it
What is your taxable income?
Your taxable income is money generated from your employer or your work. Your taxable income also includes:
- PAYG summaries
- Pensions and government allowances
- Interest earned (banks etc)
- Dividends
- Rental property income
- Business income
- Other income earned (capital gains etc)
How the ATO chooses which tax points to focus on
It’s no surprise that the ATO have been making a lot of their decisions for the tax year based on outcomes from the COVID-19 pandemic. The cost of living in general has gone up in recent times, with the costs to rent, food, and work all increasing. The ATO’s target returns is to make things as affordable as possible for the most people, while still collecting revenue. Additionally, the ATO sets focus points in areas that they believe people are likely to abuse or mistakenly overlook.
The people most affected by the ATO tax rates
COVID-19 has changed the way a lot of people are employed or conduct their business, so it is understandable that these changes may result in mistakes being made on tax returns. However, unfortunately there are people that try to abuse the tax system, or be abused. These, which are closest under the ATO’s radar include:
People working from home
A lot more people have started working from home over the pandemic, which means the ATO needs to monitor home office deductions a lot closer. During the pandemic, a lot of workers have been claiming things that maybe they shouldn’t have been. Whenever working from home, you should always log your home office use percentage and keep a record for everything you purchase. If you do this, an accountant can help you avoid any mistakes.
Rental property owners
The ATO has been observing rental property owners for a number of years because the cost of renting has been increasing for some time. This year will be no different. A common thing that rental property owners try to get away with is claiming initial repairs, and claiming capital improvements as a deduction. Whether it be intentional or a mistake, it is not allowed. Book a free meeting with a tax professional to help you with your tax reporting for your rental property.
Gig economy workers
The ATO will be looking closer at people in the gig economy for Airbnb, Uber, and other platforms, because they have found not everyone has been reporting things properly. Remember, all of the transactions on these platforms are electronic, so the ATO is easily able to track them. Use an online tax agent to assist you.
People earning from crypto currency
Cryptocurrency is a fairly new technology and as such it was only a few years ago that the income you received from trading could go completely under the radar. This is no longer the case, and not long ago many people received letters reminding them that they must declare this income. Cryptocurrency income is treated the same as any other capital gains tax.
People who receive payments in cash
The ol’ cash job is a point of contention that the ATO has been battling for years. If you get paid in cash, surely the ATO won’t find it and you don’t have to declare it, right? Wrong. The law clearly states that no matter the amount of income you get, cash or bank transfer, you must declare it.
Which tax agent should you use?
The more you deduct, the less tax you pay and the more money you can spend on yourself. The sure-fire way to do that is with a tax agent or accountant. You can also claim your tax agent/tax return fee back on tax, so why wouldn’t you use one to minimise your tax and maximise your money?
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Taxes, Health Insurance, and Wills can be time-consuming and tedious. Our app allows you to be able to do this fuss-free, giving you a simple way to organise, track and manage all of your Life Admin in one place.
Let One Click Life take care of your tax return and life’s essential tasks, so you can spend more time doing the things you love.