Self-education expense

Item ‘D4 – Work related self-education expense’ now includes education from professional organisations, eg. Seminars from CPA Australia, and not just places of education like universities. You no longer claim them at item ‘D5 – Other work-related expenses’.

Working from Home Calculations

The fixed rate method has increased to 67 cents per hour from 1 July 2022.

The record keeping requirements by the tax office to substantiate working from home deduction claims changed on 1 March 2023.

For more information, please visit our website.

Motor Vehicle Deductions

The cents per kilometre rate has increased to 85 cents per work kilometre travelled from 1 July 2023.

Key Tax Office Focus Areas

Key focus areas in the ATO’s sights are:

Rental property expenses

he ATO is warning rental property owners that their tax returns will be a focus area this tax time. According to the ATO, the “majority” of rental property owners are making errors in their tax returns, despite 86% using a registered tax agent.

The common mistakes highlighted include:

• Repairs and maintenance versus capital expenditure.
• Overclaimed deductions and lacking documentation to substantiate.
• Interest deductions include redrawing or refinance used for private expenses.
• State or Territory stamp duty being claimed as a deduction. 

Work-related expenses

Please ensure you do not take a copy and paste approach (from one year to the next) with your work-related expenses. Please ensure you review the expenses you have incurred and ensure you have sufficient records to substantiate your claims.

You can access the ATO’s Fact Sheets on Common Deductions and Record Keeping information here.

Is your side hustle a business?

There are a couple of key considerations when determining if your side hustle is a business:

1. Is it a repeated activity – are you regularly engaging?
2. Is your intention to make a profit?

If you answer yes to both questions, it’s likely the ATO would consider your side hustle a business, requiring you to have an ABN and report associated income and expenses in your tax return.

Holiday homes and rental properties

The ATO is paying close attention to holiday homes and rental properties. For holiday homes – it is important that all income is reported and that expenses are apportioned between personal and deductible. You cannot claim a deduction for your holiday home during a period it was not available to the public.

With regards to interest deductions against rental properties, it is important to remember that any redraw or refinance on a loan for purposes unrelated to the property will potentially deem that portion of loan interest not deductible.

ATO’s increasing Data Matching

Rental Property Data

The ATO will acquire landlord insurance data from insurers for 2022 to 2026. They will match properties to ATO records for the treatment of rental income, expenses and capital gains risk. This data will include payouts made by insurers that must be reported as income by the taxpayer.

Income Protection Insurance

The ATO will also acquire Income Protection Insurance policy data and match this data with policy payouts and deduction claims.

As always, do not hesitate to contact us.

Kind regards,

SaabTeece