The last 12 months have seen big changes for most Australians. Many of us have had to adapt to new ways of making money as the landscape of work continues to transform.
Unfortunately, a lot of people haven’t had time to consider the tax implications of their new venture. And even Australians who held onto their jobs will be facing a very different tax return than usual, thanks to a major switch towards working-from-home.
With all this in mind, The ATO has flagged the four areas they’ll be cracking down on hard this year. If you made money in the following ways, then make sure you’re on top of it when you fill out your return.
Working-from-home claims and business expenses.
Because of a huge uptake in people working flexibly from their homes, The ATO has said they’ll be paying close attention to the kind of business expenses that people are claiming.
They’ll be particularly focused on the way that you apportion items like internet and telephone costs between private and business use, and they expect people to keep good records of the number of hours worked from home. So don’t try to overestimate your hours, or claim that you only use the internet for work and never Netflix.
The flip side is that because no one is in the office, they’ll be expecting to see a corresponding drop in people claiming things like travel expenses or dry-cleaning uniforms. So if you claim these on top of a number of clear work-from-home expenses, you may attract extra scrutiny.
Investment Properties and Rental Income.
Extremely low interest rates and soaring property values mean that fewer landlords made a loss this year. This means they’ll be keeping a very firm eye on any problematic claims pertaining to an investment property.
Speaking to The ABC, ATO assistant commissioner Tim Loh gave some examples of problematic claims. They include people refinancing and doing kitchen renovation in the home they are living in, yet claiming the mortgage interest bill on their rental property.
Mr Loh also said that they were currently seeing a lot of people falsely claiming personal travel as being ‘directly related to work on an investment property’ when it clearly isn’t, so that’s another one to watch out for.
This is something I recently wrote about at length. The ATO has said that they are ‘alarmed’ at a significant number of Australians who seem to think that trading cryptocurrency is anonymous or completely unregulated, because of its status as an emerging technology.
Cryptocurrency investing is absolutely not anonymous. In fact, the ATO is currently operating a sophisticated data matching program focused on catching non-compliant crypto traders, so there will be nowhere to hide for those hoping to slip it past them.
The most important thing to know about crypto is that you’ll have to pay Capital Gains Tax (CGT) on any gains you make from your investment. You’ll trigger a CGT event anytime you trade, gift or sell cryptocurrency. There are a number of other things to watch out for too, like differing exchange rates.
If you’ve invested and you’re currently freaking out, don’t fear. You can read more about avoiding the crypto compliance trap here.
The Gig Economy.
Finally, the COVID-19 pandemic saw the ranks of delivery drivers, Airtaskers and Airbnb operators swell to record size, as more people than ever turned to the gig economy to make ends meet.
The ATO has made it clear that they’ll be requesting data from digital platforms such as Uber, Menulog, Deliveroo, Airbnb and Airtasker so that they can identify people who earned income through the gig economy.
If you made any income through these digital platforms for a fee, or you engaged in any other kind of one-off side hustle, then you must report this income in your tax return. The ATO will notice if you don’t.
It’s not all bad news though. Any expenses you incur to earn this income are tax-deductible and can be claimed on your return – as long as you remember to keep accurate records to support these claims.
Yeah, it’s a lot to remember. But there’s no need to freak out.
I can’t blame you if your heart started to sink as you read through some of these.
You wouldn’t be alone. Thinking about The ATO sniffing around in your affairs is enough to make most people break out in a cold sweat, even if they’ve got nothing to hide. The fact is, tax can seem so complex and intimidating for everyday people that it can be hard to know when you’re making a mistake – especially if you’ve started earning a type of income you’ve got no experience with.
Thankfully, there’s an easier way. By filing with an affordable online tax agent like Ezytaxback, you can rest easy knowing that everything has been double-checked before being sent off to the ATO. Not only do our experienced tax experts make sure that you’ve maximised your return, but they’re also trained to spot exactly what the ATO is looking for and catch any potential mistakes.
Trying to wing it on your own is never worth the risk – especially if you’re new to any of the areas mentioned above. When you’re ready to file your taxes, remember to get in touch with Ezytaxback instead. It’ll be the best $49.95 you ever spend.
Disclaimer: This advice is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether this advice is suitable for you and your personal circumstances before acting.