ATO clamps down on EOFY tax deductions


ATO clamps down on EOFY tax deductions

As usual, it’s time to organise your EOFY tax return, but it might be different this year. That’s because the ATO is now using cryptocurrency data matching to identify false tax deductions. While they are still keeping an eye on work-related expenses and asset write-offs, they are focusing heavily on rental deductions.

In fact, they are so confident of their data matching skills, they’re eagerly anticipating a 50% increase of in-depth rental audits they will perform. Areas of increased scrutiny include:

  1. Over-claimed interest,
  2. Incorrect reporting of repairs that were capital improvements,
  3. Under-reporting of income from accommodation sharing,
  4. Rentals that have very high vacancy rates.


Rental deductions under the ATO microscope


One of the reasons why the ATO is ramping up its scrutiny of EOFY rental deductions is because of the $47 billion of tax deductions claimed in 2017. Shockingly it found that nine out of ten contained errors. So, it has focused a lot of its efforts on detecting these errors, which is where the cryptocurrency data matching comes into play.

The ATO aims to use a mix of data from rental platforms, property transactions, financial institutions and rental bonds, all across Australia to highlight any reporting errors on your tax return, particularly short-term leases. For example, claiming 12 months of expenses for a rental property, but it was only rented for three months. The ATO can now demand access to your bank accounts to discover whether or not you declared all the rental income.

Work-related tax deductions


While the ATO is focussing more on rental deductions this year, work-related deductions are also on their radar. They’ve spent a lot of energy educating the public about what can and can’t be claimed as a work expense. This has significantly reduced the number of unsubstantiated claims. It’s important to remember, however, that to claim a work-related expense you must have spent the money yourself and not been reimbursed, it must be directly related to your job, and you must have a record of this expense.

Changes to asset write-offs


It’s important to note that asset write-offs on your tax return only apply to business purchases. This is not to asset purchases related to rental properties. The threshold for these write-offs has increased to $30K but depends on a number of factors: whether the business is registered for GST or not, whether their annual turnover is below $10M or between $10M and $50M, and the date the asset was purchased and first used or installed.

Extending payment reporting obligations to the Black Economy


The Black Economy covers people who operate outside the tax system. These could be criminals or even employers who do not pay their workers all their entitlements. To identify these irregularities, the ATO now requires specific businesses to submit a TPAR. This is a Taxable Payments Annual Report which must be submitted by 28 August, each year.

For the current EOFY tax return, businesses supplying courier and cleaning services need to submit a TPAR; next EOFY 2020, this will also include IT, road freight, security & surveillance services.


For assistance with your 2019 tax return and tax deductions, call us on 07 3871 1522 or send us an email for an appointment.



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