Australians who are considering overstating work-related expenses to help with the rising cost of living are being warned by the Australian Taxation Office (ATO) that they will come under fire and may face an assessment and/or audit.
Every year, about eight and a half million Australians claim about $20 billion in work-related expenses. The average claim is about $3,000.
ATO Assistant Commissioner Tim Loh told ABC News that people trying to push the boundaries of work-related spending, COVID-related spending, rent deductions, and failing to disclose or downplay cryptocurrency investments would be targeted.
When it came to work-related travel costs, he expected it to fall as most people worked from home during the pandemic.
“Last year we saw a small decrease. But we do expect that the current travel costs will decrease considerably, because if you have worked from home, you cannot be in two places at the same time.”
“The other thing we focus on is laundry costs. If people have worked from home, [they would have not been] in their uniforms.”
For people working in a field with COVID-related costs, Mr Loh said there were certain rules that had to be met in order to recover deductions for things like rapid antigen testing.
“So if you’re figuring out if you can go to Byron Bay with your friends, it’s not a deductible expense for that quick test.”
ATO’s 80-cent tax cut runs through June 30
Mr Loh said that the 80 cent shortcut method, introduced during the pandemic, would still be available until June 30 this year.
The ATO introduced this shortcut method in 2020, in response to expectations that work-from-home claims would rise due to pandemic lockdowns.
This method allows people to claim 80 cents per hour for all their operating expenses, instead of having to calculate specific operating expenses.
But tax advisers have previously warned that while the method makes things easier because record-keeping isn’t as cumbersome, the tax credit can lead to lower claims†
Mr Loh said the main benefit of using the 80 cent tax credit was: “You didn’t have to work out or itemize the deductions, you just calculate the number of hours you work from home, multiply that by 80 cents.” per hour”.
“If you’ve been working, so you know, home full-time for, say, 48 weeks out of the year, that could be the deduction [being] about $1,500,” he said.
Other methods of claiming work-related expenses require good records
For those willing to allocate costs and keep proper records to prove which part of the cost was work-related and which part personal, Mr. Loh said they would instead use the 52-cent-per-hour flat rate method. or could use the actual cost method.
He said that people who watch Stranger Things on Netflix or call their mother or father are considered private expenses.
“We see people trying to claim 100 percent of the cost when… [they] maybe some of the time [have been] using the internet for private purposes,” Loh added.
“The best thing to do is visit our ATO website where we have some comparison calculators that can calculate what you can and cannot claim and what is the best result for your specific circumstances.”
800,000 Australians invest in supervised cryptocurrencies
Cryptocurrencies are growing in popularity, with around 800,000 Australians investing in them in recent years.
“We’re really focused this year on making sure people understand that when you sell, trade, or trade crypto, there’s a taxable transaction,” said Mr. Loh.
“And also to make sure you keep good records.”
He said that in the past fiscal year, 500,000 people made a transaction in crypto and more than 300,000 people invested in crypto for the first time.
“Crypto is not anonymous, we have done a matching protocol with cryptocurrency exchanges and they share that information with us so we can match the data,” he said.
Over-the-top rent deduction under fire again
As always, the ATO also closely monitors the deduction of rental properties.
“One thing we see people doing is refinancing their investment loans and using that extra funding to invest in things like in your boat or car, which I consider a private expense,” said Mr. Loh.
“If someone does, make sure you don’t claim an interest deduction for the additional funds you use for that refinancing portion associated with a private expense.
“Another thing we sometimes see people doing is claiming the kitchen remodel as an outright deduction.
“If they spent 20,000 on a kitchen reno… you can claim that over a period of time, but not outright as a deduction.”
Beware of scammers posing as the ATO
Mr Loh said more than 50,000 tax and super scams were reported in 2021 and the average dollar amount lost to these scams was $5,600.
In the past year alone, the ATO had identified about 600 websites and took action against the agency’s online services.
“We are seeing a lot of text and email scams leading to fake myGov signup pages – more than 360 of these scams have been reported as of April 2022.”
But he added that many different types of taxes and super scams happen throughout the year, not just in the run-up to tax time.
“Scammers are always looking for new ways to convince unsuspecting taxpayers to reveal personal information, such as bank details, usernames and passwords,” Loh said.
“Contact someone you trust, such as a friend or family member. Even better, visit the ATO website where we have a list of all current ATO scams or call us on our dedicated scam hotline: 1800 008 540.”
Posted † updated
#ATOs #Tax #Time #Alert #Taxpayers #Trading #Cryptocurrencies