It’s Tax Time again. The 2018 financial year has come to an end and it’s time for you to complete this year’s Income Tax Return.
2018 ATO Hotspots
Every year about this time, the Australian Taxation Office (ATO) announces it's hotspots for the year ahead. These are the areas it will be concentrating its audit firepower on. Essentially, the ATO will be looking at two main areas; work-related expenses and claims made by investment property owners.
Work-related expense claims have been on the increase for some years, so it’s no surprise that the ATO is planning to look more closely here. This year they’ll be looking particularly closely at claims for work-related clothing, dry cleaning and laundry expenses, deductions for home office use, overtime meal claims, union fees and subscriptions, mobile phone and internet costs, motor vehicle claims where taxpayers take advantage of the 66 cent per km flat rate available for journeys up to 5,000 kms and incorrectly claiming deductions under the rule that allows taxpayers who have incurred work-related expenses of $300 or less in total to make a claim without receipts (the ATO believes that some taxpayers are claiming this – or an amount just less than $300 – without actually incurring the expenses at all).
Before making any claim, you should have the necessary proof (invoices, receipts, diaries, etc) that shows you have actually incurred the expenditure and that it was work or business related.
The other main focus this year is on claims in relation to investment properties and holiday homes. The ATO will focus on:
Excessive interest expense claims, such as where property owners have tried to claim borrowing costs on the family home as well as their rental property.
Incorrect apportionment of rental income and expenses between owners, such as where deductions on a jointly owned property are claimed by the owner with the higher taxable income, rather than jointly.
Deductions for a rental property before it is actually rented or available for rent.
Incorrectly claiming deductions for legal expenses, such as legal costs associated with buying and selling a property.
Holiday homes that are not genuinely available for rent. Rental property owners should only claim for the periods the property is rented out or is genuinely available for rent. Periods of personal use can’t be claimed. This is particularly important for holiday homes, where the ATO regularly finds evidence of home-owners claiming deductions for their holiday property on the grounds that it is being rented out, when in reality the only people using it are the owners, their family and friends, often rent-free.
Newly purchased rental properties. The costs to repair damage and defects existing at the time of purchase or the costs of renovation cannot be claimed immediately. These costs are deductible instead over a number of years.
The ATO has access to numerous sources of third party data including access to popular holiday rental listing sites such as Stayz and Airbnb, so it is relatively easy for them to establish whether a claim that a property was “available for rent” is correct. The key tip is to ensure you keep good records. The golden rule is; if you cannot substantiate it, you can’t claim it, so it’s essential to keep invoices, receipts and bank statements for all property expenditure, as well as proof that the property was available for rent, such as rental listings.
Are you confident in completing your own Tax Return?
The Australian self-assessment system may leave you vulnerable to making mistakes and facing the consequences. If you choose to complete your own Tax Return, you potentially run the risk of incurring interest and significant penalties from the ATO.
Low income earners may still need to lodge an Income Tax Return
If your taxable income is under the tax-free threshold you may still need to lodge an income tax return. Click here for more
There for you
At National Taxation, we're great listeners and we know that every single one of our Individual, Couple, Family, Business, Company, Trust and SMSF clients are unique. We have a proven track record and are well equipped with the latest knowledge to ensure that your Income Tax Return is prepared in the most professional manner, with no risk and at a reasonable cost. Our objective is always to maximise your TAX REFUND.
For your convenience, please find below a link to our 2018 Individual tax checklist, Small Business tax checklist and a list of employment-related tax deductions that may be relevant to you. To assist in preparing your 2018 Income Tax return, you may want to review these checklists.
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Time to meet
Please contact us on (03) 9583 9583 or 0411 034 275 or email on firstname.lastname@example.org, to arrange an appropriate time to complete your 2018 Income Tax Return and maximise your TAX REFUND. As always you can visit our office at 82B Charman Road, Mentone.
We look forward to being of service to you.
The information presented is general in nature and not to be used, relied or acted upon without seeking professional advice to ensure that the information appropriate for your individual circumstances. National Taxation accepts no liability for any errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice. www.nationaltaxation.com.au. ABN 63 665 545 130.