Top ATO Compliance Priorities For The Tax Year 2024

It can be hard for individuals and businesses in Australia to figure out how to follow the complicated tax laws and rules. However, with smart tax planning, Australians can get the best tax breaks and improve their cash flow and general financial health. This detailed guide will go over the top priorities of the Australian Taxation Office for the 2024 tax return. Each area is meant to give everyone the information and tools they need to effectively manage the Australian tax system, from knowing their tax obligations to taking advantage of tax breaks and deductions. Tax planning is more than just lowering your tax bill; it's also about handling your money in a way that helps you reach your long-term goals while still following Australian tax laws. In this blog, we will be discussing the top ATO priorities for all taxpayers in 2024. 

Key priorities of the ATO and changes in 2024 tax returns

1. Late payment of the Superannuation Guarantee Charge (SGC)

The ATO is focusing a lot of its efforts on getting back on track by collecting missing superannuation guarantee charges (SGC). Superannuation guarantee fees that small businesses have not paid amount to $1.8 billion. The ATO uses several tools, such as garnishee notices, direction to pay letters, Director Penalty Notices, and prosecution actions, to ensure that all outstanding SGC amounts are paid. The tax office is determined to hold companies responsible and actively looks for those who take advantage of employees by not paying them what they are owed.

2. Donations to charity

In Australia, giving to charity is a way to save cash and do good. It could be profitable for many Australians to learn how these gifts affect their tax returns. First, gifts to listed charities lower taxable income. They have to tell the Australian Tax Office (ATO) that the organisation is a Deductible Gift Recipient (DGR). Giving to the arts, disaster relief, or medical study can help you pay less taxes. There are a few things to think about. Your gift must be worth at least $2 to get a tax break and come with a statement. Don't forget to keep these papers organised all year in a folder or on your computer for tax season.

It's important to understand gifts that aren't tax-deductible. If you give money and get a lottery ticket or a meal in return, you can't claim it on your taxes. The ATO doesn't see these transactions as gifts because they are refunds. Giving to charity does more than help your taxes; it also shows that you are kind. Whether you care about health care, education, or the environment, your donations count. You are using your money to help causes that are important to you. Giving to charity is a good way to blend personal values with smart money management. When you give to listed charities and keep good records, you help people and get a tax break. This approach shows how generous Australians are by turning the work of individuals into progress for the whole group.

3. 5,000 Tax Performance Programmes 

Along with the business debt watchlist, the ATO also launched the "Next 5,000 Tax Performance Programme" in November 2023. This programme, paid for by the Tax Avoidance Taskforce, focuses on big, privately owned wealthy groups. The ATO uses data matching and analytical tools to find people who live in Australia and control more than $50 million in wealth with their partners.

It might not directly affect everyone, but it does show how the ATO plans to do audits in the future. The ATO found several problems, such as transactions involving related parties, sales of assets, capital gains tax reporting, GST calculations, income and expenses that don't match up between related parties, lack of independent valuations, leaving out related party income, problems with family trust elections, and loans that don't follow the rules.

4. Work-related expenses

In recent months, the ATO has changed the rules governing work-related expenses. These changes were made because of the realisation that problems in this area require more attention. Because of this, people are under more pressure to make sure their claims are correct and follow ATO rules. Because of the increased focus on work-related costs, taxpayers must be careful and thorough when they file their claims. Should you fail to do so, the ATO may issue fines or conduct audits, which could negatively affect your finances. Therefore, it's very important to know what these changes mean and take steps to lower the chance.

To be safer, keep careful records of all the money you spend on work-related things, including papers and other proof. Put these records in a way that makes them easy to find and access when needed. Also, learn about the ATO's rules on what work-related costs are tax-deductible. Ensure you only claim legitimate costs and avoid any grey areas that could lead to questions. 

5. Cryptocurrency

Since 2020, the ATO has sent letters to hundreds of thousands of Australian crypto investors warning them that crypto is taxed and that failing to report it could lead to penalties for tax evasion. People who got the 2021 warning letter had 28 days to tell the authorities about their crypto deals. The ATO sent more crypto notices in 2023, telling owners they needed to change their filing. 

Capital Gains Tax is charged on crypto purchases made in Australia. On your income tax return, you should list your gains and losses and pay tax on the money you gained. Save half the price if you hold on for a year. If you bought, sold, or made crypto in the last financial year, you must report it on your ATO tax return. The ATO probably already has your information if you have an account with an Australian coin-designated service provider. The ATO wants to know how much money you make and how much you gain from crypto. For both, you'll need to fill out your Annual Tax Return like you do for regular income, gains, and losses.

6. Property

According to a review done, nine out of ten rental property owners have been doing their tax returns wrong. Landlords have been given a strong warning by the ATO to amend things. The Australian Taxation Office (ATO) review found that rental income wasn't included in tax returns and mistakes were being made with property deductions, such as claiming too many costs or changes to private properties. Loh said that owners should ensure all of their rental income is reported on their tax returns. This includes short-term rentals, where part of a home is rented, and other rental-related income like insurance payouts and rental bond money kept. The ATO said that property income should be recorded in the year the tenant paid, not when the landlord's agent gave it to the tenant.

Also, the income must be shown as the gross amount received, which is the amount left over after subtracting property manager fees and other costs that the owner pays for the property. "Make sure you are declaring your gross income," said Loh. That brings us back to the first focus: property owners should ensure they keep good records. That's why documenting all your property expenses with invoices, receipts, and bank statements is essential. You should also use rental listings as proof that your property was offered for rent.

7. The new tax cut

The Senate agreed to the cost-of-living tax cuts proposed by the Albanese Labor Government. They want more Australians to earn more money and keep more of it. The bigger tax cuts for more people will help make that happen. Everyone who pays taxes will get a cut, and more people will get more tax relief to help with the cost of life. Every taxpayer will get a tax cut through the Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024. This tax cut won't raise prices or strain the budget. Labor's bill lowers two rates and raises two levels. It is the best way to help more people with their taxes and stop bracket creep, where it hurts people the most.

The law means that all 13.6 million taxpayers will get a tax cut, which is 2.9 million more than Scott Morrison's plan from five years ago. It also means that 11.5 million taxpayers, or 84%, will get a bigger tax cut. This means that 5.8 million women, or 90% of women workers, will get a bigger tax cut. More than 95% of nurses, teachers, and truck drivers will get a bigger tax cut, making them some of the most likely to gain. 

8. Unused Superannuation Contributions Capsupe caps

All people are limited to $27,500 in yearly concessional contributions. For those having a super balance of less than $500,000 at the end of June 30 of the preceding year, the regulations allow you to carry forward your unused concessional contribution cap amounts beginning July 1, 2018. Unused sums are only available for five years and then expire. If you intend to use your unused concessional contributions cap in the future, consider making the maximum contribution in 2024. 

To claim a deduction for superannuation payments on your income tax return, you are to send a signed notification (Section 290-170 notice) to your superannuation fund informing them of your plan. You must get an acknowledgement notice from the fund verifying your contribution before filing your individual income tax return.

9. Health insurance

It's hard to figure out the effects of Australia's health insurance tax. Having health insurance is important for both your taxes and getting medical care. The Australian government pushes people to get private health insurance with tax breaks and other incentives. People in Australia who don't have private health insurance and make more than a certain amount of money are subject to the Medicare Levy Surcharge (MLS). The high cost makes high-income people more likely to buy private health insurance, lowering the public health system demand. The MLS can raise your tax bill by 1% to 1.5% if you don't have private health insurance and make more than a certain amount. The MLS fee is often higher than the basic private hospital insurance coverage. For many people with higher incomes, getting private health insurance is a good idea for their health and to escape this extra tax.

You might be able to get help from the government to pay for private health insurance through the Private Health Insurance Rebate. People with registered health insurance policies can get this refund based on their income. It depends on your age and income and how much you get back. People with lower incomes get bigger tax refunds, while those with better incomes get less or nothing. When you file your tax return, you can use the refund as a tax offset or a premium cut towards your insurance. With this choice, you can pick the best way to get money.

Consider your age, income, and health needs when picking health insurance and taxes. When picking private health insurance, consider what kind of care you need and the tax breaks you can get. How Australia taxes health insurance could be just as important as planning for health care. It means looking at your tax situation, the necessary health care, and how government programmes like the Medicare Levy Surcharge and Private Health Insurance Rebate affect your money.  

10. Record keeping

As the Australian Taxation Office (ATO) always says, claims must be backed up. This means that "keeping precise records" must be balanced even for the 2024 tax return. To get all your benefits and prepare for audits, you must keep good records so that tax season is stress-free. Following this advice means carefully keeping track of your income and expenses all year. This includes bills, bank records, receipts, and other proof of purchase or cost. This might be hard for the average user, but it's about making a system that works for you. You need to keep records of everything that costs money for work. It could be computers, business supplies, office supplies, or publications linked to work. If you want to donate to charity, you need to show proof.

For home office costs, it's important to keep track of power bills, internet costs, and receipts for office furniture and equipment. The ATO may ask you to show how you calculated the part of these costs that were linked to your job, so keep good records. These days, it's easy to do this. Using technology makes keeping records easier. A lot of software and programs keep digital records of costs and receipts. These are helpful because real papers get worn out or lost.

It's also important to keep these records for at least five years after you file your tax return. This time frame is very important because the ATO can choose to do an audit during this time frame. Having your documents organised and easy to find can save you time and worry if this happens. Also, having good records isn't just about being ready for the ATO. It also helps you understand money better. Keeping track of your income and spending can help you budget and plan by showing you how you spend your money and how healthy your finances are. Record-keeping is ongoing and pays off when it's time to file taxes. Modern technologies and a consistent plan may help you make it work in your financial routine, but it takes focus and structure.  

Conclusion

Individuals and businesses in Australia need to be good at tax planning to be financially healthy and successful in the long run. By using these ATO top priorities for the 2024 tax return, Australians can successfully lower their tax bills, increase their tax deductions, and ensure they follow Australian tax laws. As you start to plan your taxes, don't forget how important it is to stay informed, take action, and be flexible. Keep up with tax laws and changes in rules, get professional help when needed, and keep reviewing and improving your tax planning methods to ensure they fit your business goals. Get in touch with The Kalculators for any questions or for personalised tax help. You can get personalised advice and help from our trained tax professionals to help you reach your tax planning goals and ensure your business is financially successful.

Frequently asked questions

Why are ATO compliance priorities important?

ATO compliance priorities help maintain a fair and transparent tax system by targeting areas with a higher risk of non-compliance or tax evasion. Prioritising these areas allows the ATO to allocate resources effectively and address tax-related issues promptly.

How does the ATO determine its compliance priorities?

The ATO uses various data analytics tools and risk assessment techniques to identify sectors, industries, or activities with a higher risk of non-compliance. This analysis helps prioritise resources and enforcement efforts effectively.

What can taxpayers do to ensure compliance with ATO priorities?

Taxpayers can stay informed about ATO priorities by regularly checking updates on the ATO website or reaching out to The Kalculators team. It's also essential to keep accurate records, report income correctly, and seek professional advice to meet tax obligations.

What are the consequences of non-compliance with ATO priorities?

Non-compliance with ATO priorities can result in penalties, fines, and potential legal action. Depending on the severity of the non-compliance, taxpayers may face audits, investigations, and even criminal prosecution in extreme cases.

How can taxpayers address any issues identified by the ATO about tax laws?

If the ATO identifies issues or discrepancies in tax returns or compliance, taxpayers should cooperate fully with any inquiries, provide accurate information, and rectify any errors promptly. Seeking advice from tax professionals or accountants can also help resolve issues effectively.