The tax office has indicated it will be scrutinising areas where taxpayers are known to make mistakes.

The ATO has confirmed it will be focusing on four key areas this tax time to make sure that there is an “appropriate level of scrutiny” on the reporting of deductions and income.

Recordkeeping, work-related expenses, capital gains from crypto, property and shares, and rental property income and deductions are the four stated priorities of the tax office this year.

“The ATO is targeting problem areas where we see people making mistakes,” ATO assistant commissioner Tim Loh said.

Aussies who deliberately try to increase their tax refund, falsify records or cannot substantiate their claims are set to face firm action according to the ATO.

“We know there is still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to,” said Mr Loh.

With the ongoing prevalence of hybrid working, the ATO indicated that it expected to see a reduction in car, clothing and other work-related expenses including parking and tolls for those who have continued to work from home.

Taxpayers are able to claim a deduction for work from home expenses using either the shortcut, fixed rate and actual cost methods but must ensure they meet the appropriate eligibility and recordkeeping requirements.

“Each individual’s work-related expenses are unique to their circumstances. If your working arrangements have changed, don’t just copy and paste your prior year’s claims,” warned Mr Loh.

“If your expense was used for both work-related and private use, you can only claim the work-related portion of the expense. For example, you can’t claim 100 per cent of mobile phone expenses if you use your mobile phone to ring mum and dad.”

For taxpayers who have disposed of an asset this financial year, including property, shares or crypto, the ATO said that they need to calculate a capital gain or capital loss and then include this in their tax return.

Particular emphasis was placed on crypto-assets including non-fungible tokens (NFTs).

“Crypto is a popular type of asset and we expect to see more capital gains or capital losses reported in tax returns this year. Remember you can’t offset your crypto losses against your salary and wages” Mr Loh noted.

“Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations.”

Research has found that around 5 per cent of Aussies now own at least one cryptocurrency, however many have not thought about how these investments affect them at tax time.

Finally, the ATO said that rental property owners must make sure they include all the income they have received from the rental property in their returns.

This includes short-term rental arrangements, insurance payouts and rental bond money that has been retained.

“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually, you can ask your registered tax agent for assistance,” said Mr Loh.

“If we do notice a discrepancy, it may delay the processing of your refund as we may contact you or your registered tax agent to correct your return. We can also ask for supporting documentation for any claim that you make after your notice of assessment issues.”

The ATO indicated that a rush of tax returns lodged in July often resulted in many mistakes when taxpayers have failed to include interest, dividends and payments from government agencies and private health insurers.

Pre-filled information is typically available by the end of July for most Aussies, which the ATO said can help make the process smoother while also saving time.

“You can check if your employer has marked your income statement as ‘tax ready’ as well as if your pre-fill is available in myTax before you lodge. That way, an amendment doesn’t need to be made later, which could result in delays to your refund,” noted Mr Loh.

“While we receive and match a lot of information on rental income, foreign sourced income and capital gains events involving shares, crypto-assets or property, we don’t pre-fill all of that information for you.”

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