The peak professional body for Australia’s accountants has a simple warning for anyone seeking tax tips this year: “Don’t poke the bear!”
CPA says a sure-fire way to do this is to omit income from your tax return.
“Most transactions where money changes hands leave a digital footprint and the ATO has even greater information-gathering powers than the police,” CPA senior manager tax policy Elinor Kasapidis says.
“If you’re thinking of playing hide and seek with the ATO, don’t expect them to close their eyes and count to ten.
“Assume they have a full line of sight on your income and don’t poke the bear.”
According to Ms Kasapidis, Australia has one of the most complex tax systems in the world, but for most employees it boils down to a few simple principles:
* If you earned money, you need to report it
* If you can’t prove an expense, you can’t claim it
* If you want to make sure you’ve got it right, see a tax agent
“Claiming deductions for work expenses is the single biggest area where people go wrong; both by claiming too much or not enough,” Ms Kasapidis said.
“The way the tax system works, if you don’t claim a deduction, you won’t get it. Plenty of people miss out because they didn’t know to ask.”
Ms Kasapidis echoed a recent warning from the Australian Taxation Office to not copy and paste last year’s deductions into this year’s return.
“It’s another sure-fire way to poke the bear,” she said.
This year, the ATO is on the lookout for anyone trying to claim hefty working-from-home expenses while also maintaining or increasing claims for things like car, travel or clothing expenses.
An easy, temporary shortcut method for working-from-home expenses such as increased power bills is an all-inclusive rate of 80 cents per hour for every hour worked from your dwelling, and you’re advised to keep a record such as a time sheet, roster or diary entry that shows those hours.
Other methods may be more suitable for employees who’ve spent a larger amount on home office expenses such as furniture and airconditioning, Ms Kasapidis said.
“Tradies are often familiar with depreciation on tools and vehicles, but many white-collar workers haven’t used this deduction before and may overlook it.”
If your duties require physical contact or proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser or antibacterial spray.
This includes industries like healthcare, aviation, hair and beauty, retail and hospitality.
The ATO’s data analytics will also be on the lookout for claims where someone’s deductions are much higher than others with a similar job and income, and also cryptocurrency transactions.
Moore Australia Tax Committee chairman Davide Costanzo says the crypto crackdown will extend to the 2023 financial year.
“Individuals and businesses often wrongly assume that income from cryptocurrency trades does not incur tax,” Mr Costanzo said.
“However, the truth is that more often than not, there is a tax obligation.”