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ATO announces Audit Targets for 2024

ATO announces Audit Targets for 2024

With the 2024 end of financial year fast approaching, the Australian Taxation Office has announced the key areas it will be focusing its attention on. These areas are being prioritised by the ATO for potential errors and audit requirements.

Work-Related Expenses

Over 8 million Australians claimed a work-related deduction in 2023, and the ATO will be looking closely at these claims in the new financial year. It is essential that all taxpayers keep a complete record of these claims should the ATO require substantiation. The ATO has also said that work-related claims that are identical to the amount claimed in the previous year are likely to be queried and asked to provide proof. The ATO has provided it's 'Golden Rules' when claiming a work-related expense:

- you must have spent the money yourself and not been reimbursed,

- the expense must directly relate to earning your income,

- you must have a record to prove the expense

Rental Property Expenses

As in 2023, the ATO will also be focusing on claims made regarding rental properties, with emphasis on claims that may have been inflated. The ATO says it will be looking into cases of deductions being inflated to offset the tax implications of increased rental income.

It is important when claiming a deduction in relation to your rental property to understand what can and cannot be claimed. The ATO cites that 9 out of 10 rental property owners are lodging incorrect tax returns. In order to mitigate this, they are increasing the level of scrutiny these returns are put under.

Many taxpayers can find it difficult to understand what can be claimed as repairs or maintenance. Expenses that are capital in nature, such as putting in a new kitchen or repairs on a newly purchased property, cannot be claimed. These examples are defined as 'capital improvements'. These can be claimed over time as capital works, but not as an immediate repairs or maintenance deduction. General repairs such as replacing damaged carpet or a broken window can be claimed as an immediate deduction. As with any claim, it is important that you keep a record should the ATO require proof.

Complete Income Earned

This year, the ATO is urging taxpayers to wait before lodging their tax returns to ensure all of their income is included. While many people are eager to get their tax work done and out of the way, it is important that all income is included. This includes not only wages, but all other income sources. While changes in reporting mean that the ATO is able to access this information on your behalf, not all of this information will be available immediately.

Lodging early may mean that not all of your income is reported. If this occurs, your tax return will need to be amended and can cause delays. The ATO urges taxpayers to make sure they lodge correctly the first time, which means waiting for your income to be correctly reported and finalised.

Read the ATO announcement here

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