H&R Block believes the ATO has identified two main hotspots in 2019 in order to reclaim these loses being a crackdown on work-related expenses and property deductions.
The ATO believes work-related expenses claims are the biggest cause of this tax gap and have signalled its intent to look closely at these deductions.
According to H&R Block, the ATO is targeting the following:
- Claims for work-related clothing
- Deductions for home office use
- Overtime meals claims
- Union fees and subscriptions
- Mobile phone and internet costs
- Motor vehicle claims where taxpayers take advantage of the 68 cent per km flat rate for up to 5,000kms
- $300 dollar or less deductions without receipts
Over 1.8 million people – or about 8 per cent of the Australian population – own an investment property, according to the ATO. With this, the ATO has highlighted it as the second-biggest area of focus, announcing a series of audits with 90 per cent of returns reviewed.
- The ATO will pay attention to excessive interest expense claims
- Incorrect apportionment of rental income and expenses
- Holiday homes that are not genuinely available for rent
- Incorrect claims for newly purchased rental properties, particularly costs of repairs and fixing defects
While it is not the main area, H&R Block also believes that the ATO is modernising and is cracking down on cryptocurrencies and sharing economy.
Cryptocurrencies are owned by between 500,000 to 1 million Australians, with the ATO believing some investors are failing to declare profits or losses on crypto.
The sharing economy
Finally, the ATO is also closely looking at the shared economy to ensure that expenses are correctly reporting. The share economy includes Uber, house sharing, skilled services and completing the odd job/errand or delivery.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.