Tax time 2024 - ATO focus areas
As the ATO gears up for tax time 2024, it has flagged three primary areas where taxpayers frequently make mistakes. The ATO has emphasised the importance of getting tax returns right the first time to avoid unnecessary complications from having to amend tax returns and attracting possible compliance activities. “These are the areas that people are most likely to get wrong, and while these mistakes are often genuine, sometimes they are deliberate. Take the time to get your return right.” – ATO Assistant Commissioner Rob Thomson.
For 2024, the ATO is particularly focused on incorrect claims for work-related expenses, inflated rental property claims, and the omission of income on tax returns.
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Work-related expenses
Last year, over 8 million individuals claimed work-related deductions, with a significant number related to home office expenses. With the revision of the fixed rate method for calculating home office deductions, the ATO now requires more comprehensive records to substantiate claims. Taxpayers are advised to keep detailed records, such as a calendar or diary, to log the actual hours worked from home and additional running costs incurred. These records should include copies of bills for electricity or internet services used while working from home.
The ATO warns against simply replicating claims from the previous year without the proper documentation as this could lead to disallowed deductions. The ATO reiterates the three golden rules for claiming any work-related expenses that employees should follow:
- taxpayers must have spent the money themselves without reimbursement;
- the expense must be directly related to earning income; and
- there must be a record, typically a receipt, to prove the expense.
Rental property owners
Rental property owners are also under scrutiny this year, with data revealing that 9 out of 10 are incorrectly completing their income tax returns.
The ATO is paying close attention to deductions claimed for repairs and maintenance, which are often mistaken for capital improvements.
While immediate deductions are permissible for general repairs, such as replacing broken windows or damaged carpets, capital improvements like kitchen renovations are deductible over time as capital works.
The ATO is encouraging rental property owners to carefully review their records before lodging their tax returns to ensure that their claims are accurate.
Getting your return correct – wait to lodge
The last area of focus for the ATO is the timing of tax return lodgments.
The ATO has warned taxpayers against lodging tax returns at the earliest possible opportunity (i.e. 1 July), as this can often lead to errors, particularly in failing to include all sources of income.
According to the ATO, taxpayers that lodge in early July will be doubling their chances of having their tax returns flagged as incorrect by the ATO.
Most income information, such as interest from banks, dividend income, and government payments, will be pre-filled in taxpayers’ returns by the end of July, simplifying the process and reducing the likelihood of mistakes.
Taxpayers are urged to check if their income statements are marked as “tax ready” before lodgment.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.