Every year the Australian Taxation Office (ATO) announces three key focus areas for individual income tax returns for the upcoming tax season. This year the ATO is focused on some common areas where taxpayers make errors on their income tax return:

    • Work-related expenses
    • Rental properties
    • Early lodgement resulting in failure to include all income

According to the ATO these are the areas people are most likely to get make mistakes when completing their individual income tax return and whilst some are genuine, many are deliberate hence the focus on accuracy. Take the time to get your ITR right the first time.

Work-related expenses

In 2023 more than 8 million people claimed a work-related deduction, and around half of those claimed a deduction related to working from home. Last year, the ATO revised the fixed rate method of calculating a working from home deduction to broaden what is included, increase the rate, and adjust the records you need to keep.

These changes are now in full effect this financial year, meaning you must have comprehensive records to substantiate your claims as you would for any other deduction. To use this method, you need records that show the actual number of hours you worked from home (like a calendar, diary, or spreadsheet), and the additional running costs you incurred to claim a deduction (like a copy of your electricity or internet bill).

Deductions for working from home expenses can be calculated using the actual cost or the fixed rate method, and keeping good records gives you the flexibility to use the method that works for you and claim the expenses you are entitled to.

Copy and pasting your work from home claim from last year may be tempting, but this will likely mean the ATO will contact you for a “please explain”. Your deductions will be disallowed if you’re not eligible or you don’t keep the right records.

Remember, the three golden rules for claiming a deduction for any work-related expense:

  1. you must have spent the money yourself and weren’t reimbursed
  2. the expense must directly relate to earning your income
  3. you must have a record (usually a receipt) to prove it.
Rental properties

Rental properties continue to remain in the ATO’s sights. The ATO recently said they often see landlords making mistakes when it comes to repairs and maintenance deductions on rental properties, so they will be keeping a close eye on this.

The ATO will be particularly focused on claims that may have been inflated to offset increases in rental income to get a greater tax benefit.

Performing general repairs and maintenance on your rental property can be claimed as an immediate tax deduction. However, expenses which are capital in nature (like initial repairs on a newly purchased property and any improvements during the time you hold the property) are not deductible as repairs or maintenance.

You can claim an immediate deduction for general repairs like replacing a portion of damaged carpet or a broken window. However, if you replace an old kitchen with a new and improved one, this is a capital improvement and is only deductible over time as capital works.

We always encourage rental property owners to carefully review their records before lodging their return and take care to ensure they are claiming deductions correctly. We also strongly recommend taking photos to prove repairs and ensure invoices are worded correctly as a repair in the case of an ATO review.

Please ensure you provide full and complete records to us as your tax agent. This will allow us to prepare your tax return correctly, so you claim everything you’re entitled to and nothing that you’re not. 

Wait to lodge

The ATO is warning against rushing to lodge your tax return on 1 July. If you have received income from multiple sources, you need to wait until this is pre-filled in your income tax return before lodging.

Commonly, where taxpayers rush to lodge in July, many forget to include interest from banks, dividend income, payments from other government agencies and private health insurers just to name a few. For most people, this information will be automatically pre-filled into your income tax return by the end of July. This will make the tax return process smoother, save you time, and help you get your tax return right the first time.

Please note – by lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO. We know many clients prefer to tick their income tax return off the to-do list early and not have to think about it for another 12 months, but the best way to ensure you get it right is to wait for just a few weeks to lodge.

We can help

If you are unsure about what you can or can’t claim or need support to ensure your income tax return is accurate, please contact us. We will work with you to ensure you are compliant whilst also maximising your return. 



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