ATO Focus Areas for 2023 Tax Year
The Australian Taxation Office (ATO) has announced its top key focus areas for the tax year, basing the list on the priority areas they often see mistakes being made.
The key focus areas are:
- Rental Property Deductions,
- Work-Related Expenses,
- Capital Gains Tax (CGT); and
- Side Gigs.
Read our summary below of the key focus areas and why the ATO is targeting them this tax-time.
Rental property deductions
According to the ATO’s review of income tax returns, it shows that 9 in 10 rental property owners are incorrectly completing their tax returns, with mistakes often being made in property related deductions.
Due to these common mistakes occurring, the ATO are encouraging rental property owners and their tax agents to take extra care this tax-time, particularly regarding correctly apportioning loan interest expenses where part of the loan was used for private purposes, and to review their records before lodging their return. They have advised that they now have access to investment property loans to cross match claims made.
To find out more on how to correctly treat rental income and expenses, please visit the ATO’s ‘Residential Rental Properties’ page.
Following the recent changes to working from home deductions, the ATO are keeping a close eye on taxpayer’s claims this tax-time. While flexible working arrangements have been adopted by most businesses since COVID-19, the ATO understand that people are working back in the office more in comparison to previous years, and are encouraging taxpayers to consider whether their claims are reflective of their working arrangements.
The ATO now require that any work from home is documented during the year. To make this easier for you, we have created a log book for any work conducted from home, which you can complete prior to doing your tax return.
Capital gains tax
The ATO are reminding taxpayers to keep good records of assets such as shares, cryptocurrency, property and managed investments, and to ensure they are correctly calculating the right amount of Capital Gains Tax (CGT) on each asset that is disposed of, unless an exemption applies, this tax year.
The ATO have an informative page on CGT, which lists helpful links to assist with calculating CGT on your assets.
A 'Side Gig' or 'Side Hustle' is a job that a person takes on in addition to their primary job in order to earn additional income. Types of emerging activities include drop shipping, content creation and influencers filling the side gig business space.
With side gigs increasing in popularity over the last few years, the ATO are reminding taxpayers who are earning money from these to consider if they are 'in business' and if so, ensuring that they have the appropriate registrations in place and are declaring this income when lodging their tax return this year.
Don’t forget, that if you’re running your side gig through a company, any individuals being appointed as a Director must apply for a director ID.
Visit the ATO's website to find out more about your taxation obligations when making money from a side gig.
If you have any questions about any of the above and would like to discuss these with your accountant, please contact our office on 1300 363 866.
Australian Taxation Office: In the ATO’s sights this tax time https://www.ato.gov.au/Media-centre/Media-releases/In-the-ATO-s-sights-this-tax-time/
Australian Taxation Office: Making money from a side hustle https://www.ato.gov.au/Business/Small-business-newsroom/General/Making-money-from-a-side-hustle-/