As normal, the ATO is cracking down on certain occupations and particular deduction categories. These are the areas that the ATO is targeting:
1) The occupations getting most attention will be:
- Tradespersons and labourers in the building and construction industry
- Construction Supervisors, project managers and marketing managers
- All Sales and Marketing Managers
2) Deductions being focused on include:
- Overnight Travel can only be claimed in two instances. Firstly, if you have actual receipts and secondly, if you received an allowance for travel from your employer you are able to use the ATO’s reasonable daily allowance. The ATO will match to benchmarks for occupation codes. Note: Fly-in-fly-out and drive-in-drive-out employees usually receive a Living away from home allowance. This is NOT a travel allowance so no travel can be claimed.
- The work-related proportion of computers, the internet, phones and other electrical devices. Benchmarks have been drawn based on occupation codes and any exceeding the benchmark will get ATO attention. You must keep a 4-week record indicating time/date of every usage, time spent, work related or not. This must be done by every member of the household for the same 4 weeks. If you have no record the ATO will assign 0% to the claim.
- Motor Vehicle Expenses from home to work. Ensure log books are up to date and business use is clear. You must satisfy particular conditions to claim home to work travel such as carrying bulky equipment that cannot be locked up in a secure facility at work or that you operate a business from home so the travel is income related.
- If a seminar is only partly related to the employees current occupation a reasonable percentage of the fee must be taken.
3) Special attention will be paid to vehicles used by the construction industry of 1-ton utilities and above.
The ATO is questioning how taxpayers originally calculated the 100% business use and no private use. Ensure your logbook is up to date, shows 100% business use and that you have access to a second car to be able to be used privately. This would put you in good stead to continue claiming the 100%. Otherwise a more reasonable estimation must be made for private use.
4) Rental Property expenses will be focused on and in particular:
- • Interest must be apportioned if your loan has both private and investment portions. Too many people are rolling home loans into investment loans and claiming full interest. Data will be matched with the bank applications and the property addresses.
- Property Investment seminars can only be partially claimed depending upon content. Course content must be checked.
- Costs to repair damage, defects or deterioration existing on the purchase of a rental property, or any renovation costs, cannot be claimed as an immediate deduction. For example, painting the outside of the property before the first tenant arrives will be classified as capital expenditure. It is best to leave it 12 months before you do any repairs to a newly purchased property.
- Be aware that the odd newspaper advert does not constitute having a rental property available for rent. The ATO states that using a property agent is greater proof to them of the property being advertised for rent.
5) Data Matching abilities include:
- Obtaining information from Ebay about online sales from 2012 and on. Income is assessable above $10,000 a year. If you cannot produce records requested by the ATO and the ATO decides you were running a business then industry benchmark figures will be used.
- The ability to match share sales from the past four years and any omissions will be picked up. Ensure that you include any share sales in the 2015 year and amend prior years.
And finally, if you have registered for MyGov and linked your ATO account, we will not be sending you the Notice of assessment this year as it will be delivered straight to your MyGov inbox.