Tax Return:: The Australian Taxation Office (ATO) Hitlist for 2023

Hello, this is your tax accountant, P&C Tax Professionals.

During each tax season, the Australian Taxation Office (ATO) directs its attention towards specific areas that are more susceptible to taxpayer errors and you may be wondering what those specific areas are for this year. Therefore, today, we will briefly go through the items that are on the ATO’s hitlist for 2023.

The ATO has disclosed the three areas it is targeting during this upcoming tax season.

Working Australians are being cautioned to anticipate reduced tax refunds this year (up to a reduction of $1500 due to the end of LMITO), as the ATO seeks to intensify its scrutiny on work-related expenses, deductions related to rental properties, and capital gains tax.

Work-related Expenses

Starting from March 1, individuals who are seeking to claim deductions related to working from home will be required to provide additional supporting information, including accurate records of the total hours worked. In addition to this, there have been revisions in calculating work-from-home deductions (check out our previous blog post on “Changes to the 2023FY Working From Home Deduction” https://www.pnctax.com.au/en/single-post/tax-return-changes-to-the-2023fy-working-from-home-deduction). Therefore, individuals should refrain from simply copying and pasting their previous year’s claims.

When it comes to claiming your tax deductions, it is important to ensure that every claim is valid and supported by evidence. For example, it is recommended to have invoices or receipts readily available to substantiate your work-related expenses.

Rental Property Issues

Investors who own properties for rental purposes will also face increased scrutiny after the ATO uncovered a significant number of inaccurate tax returns which had rental income being omitted or errors being made when claiming property deductions.

In particular, the ATO is expected to pay close attention to:

> Excessive interest expense claims > Incorrect claims for recently purchased rental properties

> Holiday homes that are not genuinely available for rent and

> Incorrect allocation of rental income and expenses among multiple owners of the property.

As a result, it is highly advisable for rental property owners to retain proper invoices, receipts, and bank statements for all expenses related to their rental property, in addition to providing evidence that their property was available for rent (e.g., rental listings).

Capital Gains Tax

The ATO will be conducting a more thorough examination of individuals who invest in cryptocurrencies such as Bitcoin. It is important to note that investing in cryptocurrencies can result in capital gains tax being applied to profits.

To facilitate this investigation, the ATO is gathering extensive records from designated service providers (DSPs) of cryptocurrencies in Australia as part of a data-matching initiative. The aim is to ensure that individuals engaged in cryptocurrency trading pay the appropriate amount of taxes. The collected data includes information on cryptocurrency purchases and sales and this data will ultimately be used to identify taxpayers who have inaccurately reported their income details.

Enquire with us today to lodge your 2023FY tax return. Simply get in touch with us through our official Facebook Page (P&C Tax Professionals – Australia) or send us a message with your enquiry to pnctax@naver.com.

Thank you and bye for now!