Each year the ATO puts the spotlight on areas that they will scrutinise more closely to ensure tax compliance. This year they have highlighted the following:
Cryptocurrency
Some people believe that the anonymity of cryptocurrency means that they can ignore tax obligations. However, the ATO collects records from cryptocurrency designated service providers and uses data-matching tools to identify taxpayers who fail to disclose their income correctly.
Capital gain events include selling and gifting cryptocurrency, transferring into a different cryptocurrency, converting to AUD and using cryptocurrency to purchase goods and services. As such, any gains made will likely be subject to capital gains tax and must be included in your tax return. In fact, even losses need to be included in your tax return so that they can be used to offset capital gains in the future.
Work-Related Expenses during Covid
The ATO are anticipating a change in work-related expenses due to the changing working habits of employees due to Covid-19. The ATO are expecting home office expenses to increase, but also business travel and car expenses to be reduced.
The ATO compare individuals’ work-related expenses with others in the same role and will investigate expenses that are much higher than their peers.
As always, the ATO suggest thorough record keeping and recommends their My Deduction tool for keeping track of expenses through the year.
Rental Properties
The ATO are reminding people that all rental income needs to be declared including Airbnb gains.
Deductions also need to be monitored to ensure that only permissible deductions are included. Interest claims during periods when the property isn’t rented shouldn’t be included, nor should redrawing on loans for personal expenditure.
Data-Matching
The ATO has an increasing number of data-matching programs set up to identify discrepancies between information provided by organisations and what has been reported on individual and company tax returns. Current ATO data-matching activities include:
- Credit & debit cards
- Specialised payment systems
- Online selling
- Ride-sourcing
- Motor vehicle registries
- Cryptocurrency