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The Australian Taxation Office (ATO) has announced its three main areas of focus for the current Tax Time:

1. Rental Property Deductions: The ATO has identified rental property deductions as a critical area for attention. Data from income tax returns reveal that a significant number of rental property owners, approximately 9 out of 10, are making mistakes in the rental schedules on their returns. Common issues include omitting rental income and errors related to property-related deductions, such as over-claiming expenses or claiming improvements on private properties. The ATO urges landlords and their registered tax agents to be cautious, review their records thoroughly, and ensure accurate claims. Particular emphasis is placed on correctly apportioning loan interest expenses when loans have been used for both rental and private purposes.
2. Work-Related Expenses: With changing work arrangements, it’s essential for taxpayers to carefully consider whether their claims align with their current working conditions. The ATO warns against “copy-paste” practices from previous years, especially for working from home deductions, as the circumstances might have changed. The ATO emphasises the importance of understanding the revised methods for working from home expenses and maintaining proper records to support claims. Taxpayers can choose between the actual cost or the revised fixed rate method for deduction, provided they meet eligibility and record-keeping requirements.
3. Capital Gains Tax: The ATO reminds taxpayers of their obligations regarding Capital Gains Tax (CGT) when selling assets like shares, cryptocurrencies, managed investments, or properties. While the main residence is generally exempt from CGT, certain situations, such as renting out part of a property through platforms like Airbnb or Stayz, may trigger CGT. It’s crucial to maintain records of the income-producing period and the portion of the property used for generating income to calculate the capital gain accurately. Taxpayers are urged to declare any capital gains to avoid penalties and to make the appropriate election in their tax return if they qualify for an exemption.

The ATO recognises the challenges faced by many taxpayers this year, and it assures support and resources to help manage tax obligations. Taxpayers are encouraged to seek assistance early or engage with their registered tax agents to find viable solutions rather than avoiding tax-related issues.