ATO Key Focus Areas In 2024 For Tax Return

Tax season is crucial for taxpayers because precision and compliance are essential. In light of the ATO's heightened scrutiny of tax returns and the identification of errors, you must comprehend your responsibilities and steer clear of frequent mistakes. This article provides information on important areas of concern, like income reporting, rental property claims, and work-related costs. With this information, you will be better equipped to manage tax season and ensure you meet your tax obligations while filing your taxes as efficiently as possible.

Top Focus Areas in 2024 Tax Return

Due to errors made in previous tax years, the ATO has decided to inform all taxpayers of key focus areas they will focus on for the 2024 tax return. Some of them are

• Work-from-home expenses
• Rental Properties
• Not lodging all income
• Economy shares

1. Work-from-home Expenses

The inaccurate claim of work-related costs is one of the most frequent mistakes the ATO encounters. The ATO has brought attention to a sizable $8.7 billion difference between the tax individuals are supposed to pay and the amount they actually pay. The ATO has indicated that it will closely monitor work-related cost claims this year, believing they are the main cause of this "tax gap". 

Deductions for expenses incurred when working from home are one area of particular attention, especially with implementation of a new fixed rate of 67 cents per hour last year. Along with these changes came stricter substantiation requirements, meaning taxpayers must keep detailed logs of their working hours, including timesheets, diaries, or work rosters, according to the ATO. Similarly, deductions for "occupation" expenses such as mortgage interest, rent, and rates are scrutinised because they aren't permitted unless the taxpayer operates a home-based business.

• Internet and mobile phone costs

The ATO is also actively monitoring claims about internet and mobile phone expenses. People who claim all or a significant portion of their mobile bills as work-related charges are the subject of special attention. The ATO also keeps a close eye out for instances of taxpayers "double dipping," in which they claim their mobile expenses separately in addition to the 67 cents per hour working from home rate, which includes a mobile phone cost component. It's critical to keep in mind that one cannot do both.

• Clothes expenses

Claims for specific work-related expenses such as washing, dry cleaning, and clothes are also being examined. In addition, the ATO is concentrating on subscriptions, union dues, and overtime meal claims. 

• Car costs

Another concern is motor vehicle claims, especially when taxpayers use the flat rate of 85 cents per kilometre for trips up to 5,000 km. Taxpayers who automatically claim the 5,000 km limit regardless of the actual amount of travel should be alert, according to the ATO. Furthermore, according to the ATO, many taxpayers falsely claim the $300 receipt-free level without really spending any money.

2. Rental Properties

The ATO is also focusing on the rise in claims about rental properties. Owners of rental properties can deduct various costs related to earning rental revenue, but these claims need to be precise and supported. Mortgage interest, property management fees, upkeep and repairs, council rates, and the depreciation of assets and capital works are all examples of deductible expenses. If the property is not rented out for the entire year, these costs must be fairly allocated and honestly incurred. Deductions must be made appropriately if a rental property is partially used for personal use or rented out at a lower price (for example, to family members). The ATO regularly monitors these agreements to ensure that deductions are not inflated. Furthermore, capital improvements—which need to be depreciated over time—are sometimes wrongly claimed by taxpayers as urgent repairs. It is important to understand the difference since improvements must be written off over several years, whereas repairs are deductible in the year they are incurred. Furthermore, the only tax deductible is the interest paid on loans to buy or maintain the rental property. The interest must be distributed appropriately if a portion of the loan is utilised for personal expenses. Check out the Common tax challenges in residential rental properties.

3. Not Lodging all Income

Although accurate income reporting is essential for compliance, many taxpayers struggle with it. The ATO is especially watchful in ensuring all revenue streams are disclosed. All income from employment, including wages, salaries, bonuses, and any other benefits from an employer, needs to be disclosed. 

Investment income must also be reported, including capital gains from the sale of assets, dividends, interest, and rental income. Income from foreign investments is routinely overlooked by taxpayers, even though it needs to be reported. Those in charge of businesses must disclose all revenue from business operations. This covers earnings from cash transactions, gig economy jobs, and side gigs. 

The ATO finds unreported revenue from a variety of sources by using data-matching tools. Several pensions and government benefits are taxable and must be reported on tax returns. These may include additional welfare payments, pensions for the elderly, and unemployment compensation. It is also necessary to declare any other income sources, including overseas income, grants, scholarships, and any other benefits obtained. There could be heavy fines and interest if not all money is reported.

4. Economy Shares

The ATO still monitors revenue from sharing economy websites like Uber and Airbnb. Improved reporting systems aim to pinpoint underreported revenue precisely. Therefore, use caution if you find employment through Uber, Airtasker, or other sharing economy sites that let you lease property or services. Numerous services, like Uber, are now providing information to the ATO, which can be used to draw attention to data inconsistencies. 

Similarly, renting out a property—or a portion of one—through Stayz and Airbnb will draw attention to you. The ATO is looking for discrepancies between the information you declare on your tax return and the data it obtains from various third-party sources, which it can use to determine if you are getting rent.

Conclusion

In summary, Taxpayers are advised by the ATO not to rush to file their taxes on July 1. You must wait to lodge until this information is pre-filled in your tax return if you have received income from numerous sources. The ATO frequently receives errors in early July from people who neglect to include dividend income, bank interest, payments from other government agencies, and private health insurance. By the end of July, most people's tax returns will have this information automatically pre-filled, which will streamline the process, save time, and help assure accuracy. 

Early July lodging increases the likelihood that the ATO may mark your tax return as inaccurate by double. Waiting a few weeks before lodging is the best method to assure correctness, even if some people might like to finish their tax return quickly so they won't have to think about it for another year. Make sure your pre-fill is available in myTax and that your employer has marked your income statement as "tax ready" before lodging to prevent the need for revisions later, which could cause needless delays.

Do not risk having problems or issues with the ATO; hire The Kalculators to ensure accuracy and precision in your 2024 tax return. Our expertise and experienced tax agents make navigating complex tax obligations a breeze. We've got you covered from calculating deductions for work-related expenses to optimising rental property claims. Take the stress out of tax season and ensure compliance with the Australian Taxation Office (ATO) regulations. Get started with The Kalculators today and unlock your financial potential!

Frequently Asked Questions

When should I lodge my tax return?

While the official start of the tax season is July 1st, waiting until all income sources are pre-filled in your tax return before lodging is crucial. Rushing to lodge your return on July 1st increases the likelihood of errors and may lead to unnecessary delays.

What are some common errors to avoid when claiming work-related expenses?

Common errors include failing to maintain adequate records, incorrectly claiming personal expenses as work-related, and double-dipping by claiming expenses covered by other allowances. It's essential to substantiate your claims with detailed documentation and ensure they meet ATO guidelines.

What deductions are allowable for rental properties?

Deductions for rental properties can include mortgage interest, property management fees, maintenance and repairs, council rates, and depreciation of assets. However, these expenses must be genuinely incurred and appropriately apportioned if the property is not rented out for the entire year.

How can I ensure I accurately report all income sources?

Gather all income-related documents, including payment summaries, bank statements, dividend statements, and income from government agencies. Ensure all sources of income are accurately reported in your tax return to avoid penalties and interest charges.

What should I do if I receive income from multiple sources?

Wait until all income sources are pre-filled in your tax return before lodging. This ensures accuracy and completeness, minimising the risk of errors and potential audits. Check if your employer has marked your income statement as 'tax ready' and verify your pre-fill is available in myTax before lodging.