Tax return: ATO boss warns new group will be targeted
The Australian Taxation Office has warned that a group of Australians will be targeted as tax time approaches.
Our lives have changed a lot over the past two years, but the ATO has warned that a particular group of Australians are not reflecting this change on their tax returns.
He said Australians who drive to work have become accustomed to declaring a number of expenses for their car, but those types of expenses could get them in trouble this year.
In an interview with the ABC, ATO Deputy Commissioner Tim Loh said he would be looking very carefully at car-related spending this fiscal time.
“What we’re seeing are people continuing to claim car and travel expenses at pre-pandemic levels,” he said.
“We expect car and travel costs to come down quite significantly, because if you’re working from home, you can’t be in two places at once.”
Repression of car-related expenses
According to the ATO, travel to and from work cannot be claimed as a tax deduction, but gas expenses for travel to a job-related task can be claimed.
If you need to be audited, you will need to prove to the tax authorities that you used your car for work, not just to run errands or visit friends.
The ATO is preparing to crack down on Australians claiming too many work-related expenses to help with the rising cost of living.
One of the biggest increases in daily consumer goods has been in gasoline prices – which have hit record highs in recent months as war in Ukraine cuts supplies.
Average unleaded prices in regional areas last week rose by 10.4 cents per liter to 211.3 cents per litre, according to the Australian Petroleum Institute.
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Capital city drivers pay even more, with the average pump price reaching 219.3 cents per liter in Brisbane, 220.1 cents per liter in Canberra and 216.4 cents per liter in Sydney.
With the national petrol price at 211.9 cents per litre, CommSec calculated that an average Australian family spent $296.66 a month to fill up their car – just below the recent record high of $297.50 dollars in May. This means the average monthly fuel bill is up $74.48 from the start of 2022.
It’s not just auto spending that the ATO will be watching closely.
Mr Loh also pointed to rapid antigen testing as an area the ATO would look into.
He said Australians who claimed rapid antigen tests on their tax return would also have to prove it was work-related and not for personal use.
“Now with these rapid antigen tests being used for work purposes, you have to meet three rules: you have to have spent the money yourself and not be reimbursed by your employer,” Loh said.
“It must be bound for work-related purposes.”
Big shift in work-from-home spending
After the closings of the last 12 months, many of us will be claiming deductions for working from home.
The good news is that this year there is still a simple system in place to calculate how much you are owed.
Since the start of the pandemic in March 2020, professionals have been able to claim a fixed hourly rate of 80 cents for their expenses instead of having to add them up manually.
The flat rate was due to end on June 30, 2021, but the tax office extended it for another year as Sydney and Melbourne were in lockdown for long periods.
This means you can use it on this year’s tax return, which you have until October 31 to do so.
However, a big change is coming from July 1, which means that from the next fiscal year, you will have to keep your electricity, internet and telephone bills and manually add up your expenses to claim a lower deduction of 52 cents an hour if you work from home.
This basically means that those of us working from home will have to get into the habit of keeping receipts from July 1.
Crypto Investors Watched
Cryptocurrencies are also under the ATO’s radar, with around 800,000 Australians investing in them over the past few years.
“We’re really focused this year on making people understand that when you sell, trade, or trade crypto, there’s a taxable transaction,” Loh said. “And also, to make sure you keep good records.
“Crypto is not anonymous, we have established a matching protocol with cryptocurrency exchanges and they share this information with us, to enable us to match data.”
You will realize a capital gain if the capital proceeds from the disposal of the cryptocurrency are greater than its cost base. Even if the market value of your cryptocurrency changes, you don’t realize a capital gain or loss until you dispose of it.
According to the ATO, if you acquire cryptocurrency as an investment, you may have to pay tax on any capital gains you realize on disposing of the cryptocurrency.