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Tax traps: What the ATO is checking this year

These are the claims you need to be extra-careful about in 2021.

Angus Kidman

by Angus Kidman

It's tax time! When you're preparing your tax return, you'll want to claim all eligible deductions. Aussies are big claimers. In 2019/2020, we claimed $19.4 billion in work-related deductions.

But you also need to remember the Australian Taxation Office (ATO) has a target list of issues to check. That changes every year. Make an ineligible claim in one of those areas and you'll potentially incur a fine (or worse).

Here are 3 key areas the ATO has in its sights for the 2020/2021 financial year.

1. Don't just copy and paste from last year

The 2020/2021 financial year is the first full tax year since the coronavirus pandemic. That means claims are likely to be very different from earlier years. In particular, claims for car and travel expenses will be lower for many people, since working from home was so common.

You can't simply copy and paste previous year's claims without evidence

Our data analytics will be on the lookout for unusually high claims this tax time. Particularly where someone's deductions are much higher than others with a similar job and income.

We will also look closely at anyone with significant working from home expenses, that maintains or increases their claims for things like car, travel or clothing expenses.”

Tim Loh, ATO assistant commissioner

2. Claim for working from home the right way

For 2020/2021, there's an easy method you can use to calculate working-from-home deductions. You can claim a flat rate of 80 cents per hour for every hour you worked from home. That figure covers everything: power, Internet access, equipment and the value of your floor space.

Finder calculates that if you had worked full-time for the whole of the year, that would add up to a claim of around $1,600. Remember that's an absolute maximum. If you worked from home between June and December but returned to work in January 2021, your maximum claim using this method would be around $800.

Also key? You can't double-dip with this method. You can't claim 80 cents an hour and also claim part of your monthly broadband bill, or your new home office chair.

Another key tip? Don't try claiming occasional travel to work.

If an employee is working from home due to COVID-19, but needs to travel to their regular office sometimes, they cannot claim the cost of travel from home to work as these are still private expenses.”

ATO

The full Finder guide on working from home tax deductions explains all this in more detail.

3. Be honest with cryptocurrency

There's a lot of Bitcoin out there waiting to be taxed. Around 17% of Australians already have cryptocurrency investments, and another 13% intend to buy into cryptocurrency, Finder research shows. According to the ATO, at least 600,000 Australians have cryptocurrency investments.

As with any investment, any capital gains you've made when selling cryptocurrency are subject to income tax.

We are alarmed that some taxpayers think that the anonymity of cryptocurrencies provides a licence to ignore their tax obligations.

We know cryptocurrencies can be complicated. That's why our focus is on helping people get it right.

The best tip to nail your cryptocurrency gains and losses is to keep accurate records including dates of transactions, the value in Australian dollars at the time of the transactions, what the transactions were for, and who the other party was, even if it's just their wallet address.”

Tim Loh, ATO assistant commissioner

In the Finder app, you can see those details for cryptocurrency you've bought and sold in the app by looking at your cash account in the Cryptocurrency tab.

DISCLAIMER: This article is general advice. It does not consider your own personal circumstances and may not be applicable to you. You should obtain professional advice and consider your own situation before acting on anything contained in our article.
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