The end of the financial year is approaching and tax season is likely to be a little different this year. From the changing nature of work-from-home claims to changes in retirement, there’s a lot to keep in mind in 2024, and a “copy-paste” job from your latest tax claim won’t cut it.
These are the key points to keep in mind for the 2024 tax season.
What is the ATO cracking down on this year?
Last year, the Australian Taxation Office (ATO) closely monitored things like rental property deductions, work-related expenses and capital gains tax. Will it be a similar story this year? On May 6, the ATO announced its priorities for tax time in 2024, and this year they are as follows:
Work-related expenses
According to the ATO, more than 8 million people claimed a work-related deduction on their tax returns last year, so it’s something the organization will be monitoring closely in 2024. Last year, the ATO also revised its method fixed rate for those who work from home and in 2024, it will be fully in force.
To use this method, you need records showing the actual number of hours you worked from home and the operating costs you incurred to claim a deduction (such as a copy of a utility bill).
The ATO took a moment to outline its three golden rules for claiming a work-related expense
- you must have spent the money yourself and have not been reimbursed,
- The expense must be directly related to obtaining your income, and
- You must have a record (usually a receipt) to prove it.
Properties to rent
Rental properties are a priority for the ATO this year as it says 9 in 10 rental property owners are getting incorrect tax returns.
“We often see landlords make mistakes when it comes to repairs and maintenance deductions on rental properties, so we keep an eye on this. This year, we are particularly focused on claims that may have been inflated to offset increases in rental income and obtain a greater tax benefit,” said ATO Deputy Commissioner Rob Thomson.
Some things homeowners should keep in mind are that general repairs and maintenance can be claimed as an immediate deduction; However, things like initial repairs on a newly purchased property or any improvements during the time you own the property (such as major renovations or upgrades) are. non deductible.
Additionally, H&R Block Director of Tax Communications Mark Chapman said homeowners should keep these things in mind when filing taxes:
- Excessive interest expense claims, such as where landlords have attempted to claim borrowing costs on the family home as well as their rental property.
- Incorrect distribution of rental income and expenses between owners, such as when deductions on a jointly owned property are claimed by the owner with the highest taxable income, rather than jointly.
- Vacation homes that are not really available for rent. Rental property owners should only claim for periods when the property is rented or actually available for rental. Periods of personal use cannot be claimed.
- Incorrect claims for newly purchased rental properties. The costs of repairing damage and defects existing at the time of purchase or the costs of renovation cannot be claimed immediately. These costs are deductible over several years.
Chapman recommends that, to avoid being reported for any of the above, homeowners keep good records.
Rushed Accommodations
It may be tempting to file your taxes as soon as possible so you can see that (hopefully) sweet refund in your bank account as soon as possible. However, the ATO advises against hosting too quickly as this may result in your return being flagged as incorrect.
“We see a lot of mistakes in July where people forgot to include interest from banks, dividend income, payments from other government agencies and private health insurers,” Thomson said.
You don’t have to wait too long though, as the ATO says it usually pre-fills at the end of July. This can be double-checked in your account by making sure all of your tax returns are marked as “tax ready.”
For additional details on what you can and cannot claim, see the ATO’s occupation and industry guides here. Stay up to date with more information this tax time here.
Feature Image Credit: Netflix/iStock
