A Must Read before lodging your return with the Tax Office this year

Written by Ronald Pratap

on June 1, 2018

Every year we hear from the Tax office about the latest Industries that they will target and things they will be looking for.

The objective of this is to get people thinking about their returns and phase out ‘dodgy’ practices.

So, what is the Tax office(ATO) targeting this year?

They ultimately look at 2 key areas which include: work-related expenses and claims by investment property owners which we will discuss in this article and touch on a relative new area the ATO is focusing on- The Share economy.

Work-related deductions

This is an area that has been increasing looked at for some years especially in certain industries, so it’s no surprise that the ATO plans to look more closely in this area. The attention this year will be on:

– Claims for work-related clothing, dry cleaning and laundry expenses. (For instance, the ATO has flagged that it will check taxpayers who take advantage of the exemption from keeping receipts for spending less than $150 on laundry expenses; it believes that too many people are claiming this without actually incurring the expense. So, it is best to double check you past returns and if you are using an Accountant that he is not claiming this on your behalf with no proof)

– Deductions for home office use.

– Overtime meal claims.

– Union fees and subscriptions.

– Mobile phone and internet costs.

– Motor vehicle claims where taxpayers take advantage of the 66 cent per kilometre flat rate for journeys up to 5000km. (The ATO is concerned that too many taxpayers are automatically claiming the 5000km limit regardless of the actual amount of travel.)

Incorrectly claiming deductions under the rule that allows taxpayers who have incurred work-related expenses of $300 or less in total to make a claim without receipts. (The ATO believes that some taxpayers are claiming this – or an amount just less than $300 – without actually incurring the expenses at all.)

The above examples are areas that an Accountant is driven by the information you provide and, in some cases, put down by the Accountant without your knowledge. So, it is best to double check to avoid any issues.

The best thing you can do to protect yourself is be confident that you understand what you can and can’t claim and that you have the necessary proof (invoices, receipts, diaries, etc) that you actually incurred the expenditure and that it was related to your work or business.

The Tax office will also take a closer look at the increasing investments in cryptocurrencies such as Bitcoin. Increasing numbers of taxpayers are jumping on the bandwagon and the ATO believes that some of them are failing to declare the profits (and in some cases the losses) they are making on their investments. This is a new area and many Investor’s do not understand their obligations under the current rules and again really on hearsay to get them by. Remember that this is treated the same way any other investment is and will have Capital gains tax applicable if there are profits.

 

Property

People claiming tax deductions in regard to their Investments properties or holiday homes have always been looked at and this year is no different.

About 8% of the population – own an investment property, according to ATO figures, so this is a large and growing area for it to examine:

– The ATO has announced it will pay close attention to excessive interest expense claims, such as where property owners have tried to claim borrowing costs on the family home as well as their rental property so be sure to clearly separate the expenses and keep separate accounts if possible for this.

– It will also look at the incorrect apportionment of rental income and expenses between owners, such as where deductions on a jointly owned property are claimed by the owner with the higher taxable income, rather than jointly. (e.g. 50/50 The splits are proportional to expenses and rent.)

– It will look at holiday homes that are not genuinely available for rent. Rental property owners should only claim for the periods when the property is rented out or is genuinely available for rent. Periods of personal use can’t be claimed. This is particularly important for holiday homes, where the ATO regularly finds evidence of homeowners claiming deductions for their holiday pad claiming it is being rented out, when in reality the only people using it are the owners, their family and friends, often rent free.

– It will keep a close eye on incorrect claims for newly purchased rental properties. The costs to repair damage and defects existing at the time of purchase or the costs of renovation cannot be claimed immediately. Instead, these are deductible over a number of years. Expect to see the ATO checking such claims and pushing back against those that don’t stack up.

 

Share economy

Individuals using a second source or primary source of income in this space has become more common and the Tax office wants to ensure reporting in this area is correct. Examples quoted by the ATO include services such as:

– Renting out a room or the whole house for accommodation. (A prime example of this is AirBnb.) The biggest issue around this is also selling the home if you still include this as your main residence come tax time as the law prevents a full CGT exemption where part of a Main Residence has been used to earn income.

– Ride-sourcing – transporting passengers for a fare e.g. Uber and Olga

– Renting out parking spaces. (e.g. Parkhound or Parkey)

– Providing skilled or general services – web or trade services (Airtasker workers, for instance)

– Supplying equipment, tools, etc. for payment (e.g. Placing an ad on Gumtree regularly to rent out tools and machinery.)

– Completing odd jobs, errands, deliveries for payment etc.

 

Please remember the Tax office (ATO) has access to a lot more resources than you do and can look at your social media history, third party records and numerous sources so be careful about the information you are declaring.

The golden rule here is if you can’t prove it or have evidence of it then you cannot claim it.

Ensure you have all your invoices, Tax receipts and statements for anything related to your Employment, Studies and Investments as well as keeping clear records of when Assets were or were not Investments e.g. Rental Listings.

RP Wealth Management have partnered with a number of Accounting firms in the Macarthur region and in the surrounding suburbs including Camden, Campbelltown, Oran Park, Narellan, Bossley Park, Liverpool and the Greater Western Sydney. So, if you require assistance in this area, please feel free to reach out to us.

Below are some useful links to asst you with understanding your obligations and staying within the legal limits.

https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/

https://www.ato.gov.au/General/Property/Residential-rental-properties/

 

Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

Latest Posts

Setting yourself up for a successful 2024

Setting yourself up for a successful 2024

January 29, 2024
Everything you need to know about making your Will

What you need to know about making your Will

January 29, 2024
How much will I need in retirement_

How much will I need in retirement?

August 6, 2023
What Clients Are Saying About Our Financial Planning Services
I had the pleasure of meeting Ronald for my first consultation and he explained everything step by step to myself whi has no financial/investing experience.I was terrified of making a move to seek financial advise and he simplified it for me the best he could and left me with comfort in making the right decision by approaching RP wealth management. I'm excited for the journey ahead of taking control of my finances.Thanks again Ronald
Shadia Haoui
Shadia Haoui
02:43 16 Aug 23
I would recommend the team at RP Wealth management to anyone looking at getting their personal insurances sorted and financials planning in order. Ron and Sedat are proactive with their approach and are a wealth of knowledge. Thankyou team
Pat Zarzour
Pat Zarzour
11:15 09 Aug 23
Ronald is a very experienced Financial Advisor and very professional. Nothing is a trouble for him he goes over and above always being patient and explaining everything that is required for the client in their best interests. He is so knowledgeable and his presentations are amazing well set out and easy to understand. So glad we were referred to him he has helped myself and husband so much. 5 Stars for sure thanks Ronald.
Nicole Ferraro
Nicole Ferraro
08:23 24 Jul 23
4 months ago I sought out advice on financial security, investments and retirement. At my 1st consultation I found Ron to be welcoming, friendly and professional. He was honest and upfront about the services he offered.Since then Ron and I have discussed options and strategies, combining my current financial situation and superannuation. His expertise, knowledge and access to a broad range of financial products helped in developing a personal customised plan.I'm very happy to recommend RP Wealth Management Ron and his team. They get 2 thumbs up from me.Thank you Ron for your support and guidance. I look forward to your continual advice in the future.
Shirley McNicol
Shirley McNicol
14:23 17 Jul 22
Great team, very helpful.Ronald always goes out of his way to assist with any questions I have and there is constant engagement, great reporting and a real sense of the team being there to support and help you. I must admit I was sceptical about seeing a financial advisor, I had worried I was going to meet with some slick salesperson interested in cashing in on my inexperience and trying to sell me a bunch of things I didn't really need. Ronald was the complete opposite to this, he has been open and honest and genuinely interested in our goals, we will not be changing, and we will be sticking with the team at RP Wealth Management.
Justin Read
Justin Read
00:02 30 Mar 22
Ron and team are very professional, patient and very transparent.Very happy to have found Ron and working on my needs.
Vinodh Kumar Ravinder
Vinodh Kumar Ravinder
17:52 24 Feb 21
Ronald is very informative and professional and I have no hesitation to recommend him highly.
Chris Bakalian
Chris Bakalian
04:30 02 Jun 20
Ron and the team are extremely professional and knowledgeable, complimented by exceptional customer service.
Michael Ferella
Michael Ferella
04:11 27 May 20
Ron is honest, intelligent, trustworthy, and hardworking adviser. Always goes above and beyond to ensure he gets the best outcome for his clients. Highly recommended!
Petra Novakova
Petra Novakova
12:25 06 Feb 20
Ron is amazing!! He is so easy to talk to and explains things so you can understand everything. If we had any questions about anything he was always there to answer our questions. Definitely recommend him.
Jessica Lanzendorfer
Jessica Lanzendorfer
09:05 11 Oct 19
Ronald is a great person to deal with...explains everything very clearly and goes through all your options...looks out only for his client not any personal gain..I feel confidence that my wealth management and finances are handled correctly with his guidance
Jordan Mijalkov
Jordan Mijalkov
07:57 24 Sep 19
Ron and his team have a wealth of knowledge in the industry and have referred relatives and clients, whom have been satisfied with his service to ensure that they are adequately protected.
Daniel Caldwell
Daniel Caldwell
22:24 07 May 19
Have had a great experience, have felt all meetings and communication to be very informative and honest in areas I was uncertain about.
Josh Saumatua
Josh Saumatua
08:34 22 Jul 18
Very knowledgeable and informative. Happy to answer all questions and always responds to my calls/emails. Takes control which makes for a simple and seamless process.
Dee Bee
Dee Bee
12:24 20 Jul 18
Ronald is so easy to deal with and helps you every step of the way to make it so efficient and quick to fill out paperwok. He is very professional and makes it all happen so quickly. He always picks up the call or gets back to you, What else can you ask for. Great guy and service
Mibu Medispa
Mibu Medispa
08:08 16 Jul 18
Very professional and consistent in his work with truckloads of knowledge in his industry. He helped me with my life insurance and did a fantastic job from start to finish. Walking me through the entire process and always following me up. I would not hesitate for a second to recommend Ronald’s services to anyone. Great guy. Great professional. Great service.
Caterina Romeo
Caterina Romeo
01:07 18 Apr 18
I met Ronald in a professional capacity, and his willingness to share his insights and his enthusiasm for the work that he does clearly shines through. I'd highly recommend connecting with him if you're looking for an adviser who holds great integrity in the way they support their clients.
Shannyn Merlo
Shannyn Merlo
08:32 23 Feb 18
Great service and very helpful
Dragan Jelic
Dragan Jelic
01:25 27 Oct 17
Ronald is great communicator and very knowledgable with his financial advise. He helped my wife and I structure a better protection plan covering life insurance, trauma cover and income protection. Easy to discuss any questions we had and generally very helpful. I highly recommend talking with Ron!
James Newman
James Newman
03:38 25 Sep 17
Ronald is a really easy going guy to deal with. He will go above and beyond to ensure he finds out all the details and gets you the best cover for your circumstances. Ronald made the process of getting Trauma Insurance and Life Insurance very easy - much easier than I thought and it was surprisingly cheaper than I thought it would be too. I really recommend you see RP Wealth Management.
Hayley Pieplenbosch
Hayley Pieplenbosch
05:55 28 Jul 17
I needed general financial advice and he delivered with the lingo I easily understood. Friendly guy and always approachable. Would highly recommend him to anyone!
Gorgi Serovski
Gorgi Serovski
13:09 22 May 17
A hard working and diligent professional, Ronald certainly places his clients needs first in all situations. Keep up the good work!
Shaun Pereira
Shaun Pereira
00:14 19 May 17
We've Been Featured In
Industry Recognition

TAL Rising Star Financial Planning finalist 2016

RI Advice Excellence award Finalist 2014

One of the 50 Most Influential Advisers 2021

Subscribe To The RP Wealth Newsletter
You’ll receive the latest information about our business, services, new offerings and our marketing communications.
Book Your Consultation
Are you ready to secure your financial future today?
Get in touch with us to develop your strategic plan and achieve peace of mind.

© 2023 RP Wealth | Privacy Policy