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ATO Focus Areas for Your 2024 Tax Return: What You Need to Know

ATO Focus Areas for Your 2024 Tax Return: What You Need to Know

As the 2024 tax season approaches, the Australian Taxation Office (ATO) has released its focus areas. It has highlighted key items that may attract additional scrutiny. If you’re filing your tax return, especially as an expat or property owner, it’s essential to be aware of these focus areas to ensure compliance and maximise your deductions. Here are the primary concerns for 2024:

Tax Return Tip 1: Work-Related Expenses

Many expats, particularly non-residents, often miss out on claiming work-related expenses due to the requirement for a direct link between expenses and taxable income. For those who work part of the year in Australia, it’s vital to keep accurate records of your deductions.

The ATO has enhanced its website to help taxpayers identify what can be claimed. It provides detailed guides categorised by occupation and industry. Here are some tips to avoid common pitfalls:

Understand the Deductions: Be careful not to claim more than the allowable percentages for items like phone and internet expenses. Avoid double-dipping on home office deductions.

Know the Rules: Laundry costs are not a blanket deduction. They must pertain to specific work-related clothing, like uniforms or protective gear.

Remember these three golden rules for claiming deductions:

  1. You must have incurred the expense yourself and not been reimbursed.
  2. The expense must directly relate to earning your income.
  3. You must retain a record (usually a receipt) to substantiate your claim.

Tax Return Tip 2: Rental Properties

The ATO estimates that 9 out of 10 rental property owners are incorrectly reporting their rental schedules, which can lead to significant issues. Key areas of concern include:

Repairs vs. Capital Improvements: Ensure you’re not misclassifying capital items as repairs, as this affects your deductions.

Interest Payments: Only the interest component of your mortgage is deductible, not the total payment.

When preparing your rental property schedule, it’s crucial to conduct a thorough review of your expenses. This is to ensure accuracy and raise any questions about discrepancies.

Short-Stay Rentals

As short-stay rentals increase, the ATO will cross-check data from accommodation providers to ensure that all rental income is reported. If you partially occupy your property while renting it out, complexities may arise regarding how much you can claim and what income is taxable.

Tax Return Tip 3: Missing Income

The ATO advises against lodging tax returns too early. Financial institutions and share registries may take weeks or months to provide all relevant information. Therefore, relying solely on ATO records can be misleading.

Review All Information: Make sure that your tax return reflects all income earned throughout the year, and compare it with previous years to catch any omissions.

Special Considerations for Expats: You may inadvertently include income that should be excluded based on your residency status or double tax agreements. You also need to report some employment income, even if it isn’t taxable, especially if you have HECS/HELP debts.

Conclusion

As you prepare your 2024 tax return, understanding the ATO’s focus areas is essential for ensuring compliance and optimising your tax position. Therefore, consult our Tax team for tailored expert advice to your specific situation.

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