ATO Compliance Targets for Tax Return 2016

Who will the ATO be focussing on this year?

ATO Compliance Targets for Tax Return 2016

The ATO will be focussing on certain areas of your 2016 tax return, to make sure that it meets all of the relevant legal compliances and tax standards. The ATO usually announces their compliance target areas before the start of each new financial year, reminding us to double-check our tax claims for both the previous and upcoming Tax Seasons.

So what will the ATO’s be looking at this year? Essentially, they will be looking at two main areas: work-related expenses and claims made by investment property owners, held by individual and corporate entities. The decision comes as no surprise, as work-related claims have increased in recent years, and it is a common area for taxpayers to make mistakes or declare misleading information.

To avoid any unnecessary legal or tax problems, it is recommended that you organise and track your work-related purchases, and have a good bookkeeping system which includes all of your receipts, invoices, a logbooks or diaries, and bank statements.

They will be paying special attention to:

  • Car expenses claims for transporting bulky tools
  • Work-related travel
  • Internet and/or mobile phone usage claims
  • Self-education costs

According to ATO indicators, over 1.8 million people own an investment property in Australia, so there will be a large focus on deduction claims made in relation to investment properties and holiday homes. This includes:

  • 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.
  • Holiday homes that are not genuinely available for rent.
  • Incorrect claims for newly purchased rental properties. Expenses that cannot be claimed immediately include, costs to repair damage which existed at the time of purchase, and the costs of renovation.

The ATO is now using data matching software on taxpayer information and third-party sources, to catch those who are not declaring income, such as:

  • Capital gains tax, from the disposal of shares and property
  • Foreign source income
  • Contractor income from payments made by government agencies

Other areas that the ATO will be paying close attention to, include those working in a shared economy, and ensuring that their income and expenses are reported correctly. Examples that have been provided by the ATO, include:

  • Renting out a room or house for accommodation (such as Airbnb hosts)
  • Ride-sourcing; transporting passengers for a fare (such as Uber drivers)
  • Renting out parking spaces
  • Renting out equipment, such as tools, musical instruments, sports equipment and so on.
  • Supplying tools or equipment
  • Providing skilled services; such as web or trade services
  • Completing odd jobs for payment

Before you make any tax claims or deductions this Tax Season, make sure that you have the paperwork to back it up! It’s critical that you keep an organised and secure record of your receipts, invoices, logbooks and bank statements as a proof of purchase, just in case you are audited by the ATO.

Looking for an Accountant to process your tax return or offer tax advice? Contact us below or call us on 1800 556 122

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Chapman, M. (2016, June 28). ATO hotspots this year – do they apply to you?. Yahoo7 Finance.