Each year the Australian Taxation Office (ATO) prioritises areas to focus on within income tax returns, usually related to areas they see mistakes being made.

For the 2023 financial year they have announced their intentions to focus on the following areas:

• Rental property deductions
• Work-related expenses
• Capital gains tax (CGT)

Rental Property deductions

An ATO review shows 9 in 10 rental property owners are getting their income tax return wrong, in particular the rental income and interest expense deductions. With the recent implementation of a residential investment property loan data matching program, the ATO is particularly focused on interest expenses being claimed.

To ensure the correct data is reported for deductions for your rental property, we encourage a review of interest expense claims, ensuring an apportionment of interest has been included, when part of the loan was used for private/non rental property related purposes or the loan was re-financed with some other private purpose.

Work-related expenses

‘Don’t be tempted to just copy and paste your prior year’s claims’ – Assistant Commissioner Tim Loh

With workers returning to the office and changes to the work from home deduction methods from 1 July 2022, the ATO is particularly focused on ensuring taxpayers can justify their work from home and work-related expense claims.

From 1 July 2022, the ATO scrapped the 80c per hour shortcut method, leaving the actual cost method and the revised fixed rate (67 cents per hour) method for tax payers to use for work from home expenses in 2023. Eligibility and record-keeping requirements must still be met for this to apply.

Expenses included in the revised fixed rate method are internet, phone, electricity, gas, stationary and computer consumables. For the first time, phone usage and internet expenses are included in the fixed rate method. To be eligible, you are required to keep the following records:

From 1 July 2022 to 28 February 2023 – a 4-week diary representing the total number of hours worked from home from.
From 1 March 2023, a record of all hours worked from home.

Capital Gains tax (CGT)

If you sold any of the following assets in the 2023 financial year, the relevant capital gain, capital loss and/or exemption is required to be included in your return:

Property
Shares
Crypto currency
Managed investments

Generally, your main residence is exempt from CGT. However, if you have used your home to produce income by renting all or part of it out using accommodation sharing platforms, e.g. Airbnb or Stayz, or you run a business from home, then CGT may apply.

We encourage you to take extra care to review records this tax time in relation to these three ATO focus areas.

Contact Pilot

If you have any questions relating to any of these ATO focus areas, or your deductions, please contact Kristy Baxter or Angela Stavropoulos or your Pilot advisor on 07 3023 1300.