Navigating Tax Time 2024: ATO’s Priority Areas
As we prepare for Tax Time 2024, it’s essential to be aware of the Australian Taxation Office’s (ATO) top priority areas. The ATO has identified three critical focus areas that will greatly influence the review and assessment of tax returns this year.
- Work Related Expenses
The ATO has signalled increased scrutiny on the accuracy of claims for work-related expenses. One significant change involves the revision of the fixed rate method used to calculate deductions for working from home, applicable for the entire financial year.
What does this mean for you? It underscores the importance of maintaining meticulous records to substantiate any claims you make. Whether it’s office supplies, utility bills, or other expenditures related to your work-from-home setup, keeping thorough documentation is key to ensuring compliance and maximizing deductions.
- Navigating Rental Property Claims: Avoiding Common Pitfalls
Recent statistics released by the Australian Taxation Office (ATO) paint a concerning picture: 9 out of 10 rental property owners are inaccurately filing their income tax returns. What’s even more alarming is that these errors persist even when returns are prepared by tax professionals.
So, what are the common issues contributing to this high rate of inaccuracies? Let’s delve into a few:
Double-dipping on expenses: This occurs when rental property owners claim expenses that have already been paid by their rental agents. While it might seem like a simple oversight, it can lead to serious repercussions during tax audits.
Overclaiming interest deductions: Another prevalent issue is claiming 100% of interest expenses on loans that have been redrawn for non-deductible purposes. It’s crucial to accurately apportion interest deductions based on the portion of the loan used for income-producing purposes.
Immediate deductions for general repairs: Many property owners mistakenly seek immediate deductions for general repairs when perhaps that may be depreciated over time.
Given the ATO’s heightened scrutiny in these areas, it’s more important than ever to ensure that all rental property claims are legitimate and well-documented. Failure to do so could result in penalties and additional scrutiny during tax audits.
- Income Reporting
As we approach another tax season, it’s crucial to consider the timing of income tax return lodgements. The Australian Taxation Office (ATO) advises against premature lodgements, particularly from 1st July onwards.
If you’ve earned income from various sources, it’s advisable to hold off on lodging your tax return until you hold all of your available information.
The ATO has indicated that they see a lot of mistakes when returns are lodged in July when individuals have forgotten to include interest from banks, dividend income, payments from other government agencies and private health insurers. The ATO has also advised that lodging in early July, can double your chances of having your tax return flagged as incorrect by the ATO.
We’re committed to helping you navigate through these issues. If you have any questions or need assistance, don’t hesitate to reach out to one our team members at [email protected].
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