Tax Time 2022: ATO Focus Areas

Tax time 2022 is here, and this financial year, the ATO will again focus on a few key areas to ensure that individuals are doing the right thing and paying the right amount of tax. The ATO considers these key areas to be problem areas where individuals make the most mistakes. 

Like last year, the ATO recommends that people wait until the end of July to lodge their tax returns and not rush to lodge at the beginning of July as much of the pre-fill information has not yet been bedded down. In the past, it has been noted that individuals who lodge early forget to include interest from banks, dividend income and payments from government agencies and private health insurers. 

“You can check if your employer has marked your income statement as ‘tax ready’ and if your pre-fill is available in myTax before you lodge. That way, an amendment doesn’t need to be made later, which could result in delays to your refund”

Tim Loh, ATO Assistant Commissioner.

The ATO also reminds taxpayers that while it receives and matches the information on rental income, foreign-sourced income and capital gains, not all of that information will be pre-filled for individuals. Taxpayers will therefore need to ensure that all that information is included to avoid being caught up in ATO data-matching programs later. 

Some of the traditional areas that the ATO will be focusing on this year include:

  • Record-keeping.
  • Work-related expenses.
  • Rental property income and deductions.
  • Capital gains from property and shares.

In addition, this year, the ATO will also focus on capital gains from cryptocurrency assets. However, with the recent crashing of cryptocurrency prices, individuals are more likely to have a capital loss. 

The ATO reminds taxpayers that any deductions that are claimed require substantiation, and those individuals who deliberately attempt to increase their refunds by falsifying records, or are unable to provide documents to substantiate those claims, will be subject to “firm action”. For those taxpayers working from home or in hybrid working arrangements who claim expenses related to that, the ATO has said it will be expecting a corresponding reduction in other costs such as car, clothing, parking, tolls etc. 

Three methods are still available to taxpayers to deduct working from home expenses. These are actual cost, fixed-rate, and the short-cut method. Taxpayers should check their eligibility and work out the one that suits their situation the best. 

With the intense flooding experienced earlier this year, the ATO notes that some rental property owners may have insurance payouts related to their property. Any insurance payouts and other income received, such as a retained bond, or short-term rental arrangements, must be reported as income. 

Lastly, the ATO will be keeping a close eye on those individuals disposing of property, shares, and cryptocurrency, including non-fungible tokens (NFTs). Those with a capital gain need to include the gain in their tax return and pay tax on the gain at their marginal tax rates. Individuals who have recently sold out of cryptocurrency assets may have experienced a capital loss, which the ATO warns cannot be offset against other income such as salary and wages and only against further capital gains. 

Need help this tax time? 

If you need help this tax time, we can help you maximise your deductions and lower your taxes. If you’re not sure what you can claim or whether you’ve made capital gains or losses from selling assets, we have the expertise to help you. Contact us today on enquiries@rm.net.au

**The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

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