By Erny Lie, Manager at DFK Benjamin King Money

With the new tax return season upon us the Australian Taxation Office (ATO) has announced their key focus areas for Tax Time 2022. These areas include the following

  • record-keeping
  • work-related expenses
  • omission of business income
  • rental property income and deductions, and
  • capital gains from crypto assets, property, and shares

Record keeping

Ensure you have records of expenses for any deductions claimed including details of how that expense is related to the way your income is earned.

Work-related expenses

To claim a tax deduction, you need to have incurred the expense yourself, and not been reimbursed by your employer or business at the current or later time, and the expense needs to be related to your work. If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense.

For the working from home deduction, there are three methods available depending on your circumstances. You can choose from the shortcut (all-inclusive) 80 cents per hour method, fixed rate 52 cents per hour method and actual cost methods, as long as you meet the eligibility and record-keeping requirements for the method you are using.

Each individual’s work-related expenses are unique to their circumstances, job position and can change on a year to year basis. If your working arrangements have changed in the 2022 year, consider your work arrangement this year as your deductions should not be based on prior year’s returns.

Rental property income and deductions

If you are a rental property owner, the focus is on ensuring that all income received, whether it is from long-term or short-term rental arrangements, rental bonds, back payments and insurance payout are recognised in your tax return.

If your rental property is outside of Australia, and you are an Australian resident for tax purposes, you must recognise the rental income you received in your tax return, unless you are classified as a temporary resident for tax purposes.

Capital gains from crypto, property or other assets

If you dispose of an asset such as property, shares, or crypto assets, including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.

This can include selling cryptocurrency for a currency such as Australian dollar, trading/exchanging/swapping one cryptocurrency for another, gifting it, trading it, or using it to pay for goods or services. Each cryptocurrency is a separate asset for CGT purposes. When one cryptocurrency is disposed to acquire another, you are disposing of one CGT asset and acquiring another CGT asset. Transferring cryptocurrency from one wallet to another is usually not a CGT disposal if you maintain ownership of the coin.

If you acquire the cryptocurrency to make a private purchase and not hold onto it, the crypto might qualify as a personal use asset. However in most cases, people acquire cryptocurrency as an investment, even if they do sometimes use it to occasionally purchased goods or services for private use.

Record keeping is again important; you need receipts and details of the type of coin, purchase price, date and time of transactions in Australian dollars, records for any exchanges, digital wallet and keys and commissions or brokerage fees. The ATO regularly runs data matching projects, and has access to the data from crypto platforms and banks.

Lodge right the first time

ATO informs taxpayers that they risk any tax refund being delayed or having their return adjusted if they lodge their tax return before their income statement from employer is marked as ‘Tax ready’.

Each year from late July onwards prefill information from ATO are available for most interest income from banks, dividend income, payments from other government agencies and private health insurers.

While ATO receive and match a lot of information on rental income, foreign sourced income and capital gains events involving shares, crypto assets or property, those information will not be available on the prefill report.

ATO reminders on Covid-19 related tax issues

  • COVID-19 work related expenses; make sure expenses claimed are substantiated and that the subject of the expense was not used for private purpose
  • Pandemic leave disaster payments are taxable and must be included in tax returns
  • Jobseeker payments received are taxable
  • COVID-19 disaster payments for people affected by restrictions are not taxable, and do not need to be included in tax returns

If you have any further questions about the contents of this article please don’t hesitate to contact your BKM representative