THE PAPER TRAIL: 3 areas to take extra care with your tax return this year

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Each year the Australian Tax Office targets specific types of tax claims to ensure deductions aren’t being abused.

With tax time just around the corner, it’s worth knowing what the ATO is focusing on to avoid a delay in getting a return or penalties for mistakes.

This year the ATO will be specifically focusing on unusually high work-related expense claims across all industries and occupations, in a “much wider approach than in previous years”.

With technological enhancements and use of analytical data the ATO says its ability to identify and investigate claims has improved.

“These enhancements mean that every return is scrutinised and it is becoming a lot easier to identify claims that are significantly higher than those claimed by people with similar occupations and employment income,” Assistant Commissioner Adam Kendrick said.

Here are some other areas the ATO will be paying closer attention to this year, so you know where to to take extra care.

1. Claims that have already been reimbursed by employers.

To ensure you get this right double check that you have spent the money yourself, ensure that it is actually related to your job, and always have a record to prove it.

2. Claims for private expenses such as travel from home to work.

When claiming work-related travel, it’s important to remember you cannot claim for a normal trip between home and work.

The only way this claim would be acceptable would be if you use your car to carry bulky tools or equipment which you use for work and can’t leave on the work premises, or if your home is a base for employment, or you have shifting places of employment (you regularly work at more than one place each day).

3. Rental property deductions.

In particularly, the ATO is paying close attention to excessive deductions claimed for holiday homes, husbands and wives splitting rental income and deductions for jointly owned properties that is not supported, claims for repairs and maintenance shortly after the property was purchased, and interest deductions claimed for the private proportion of loans.

In fact the ATO has provided a few simple steps to follow to make sure you get your rental property deductions right.

“First, it is important for all property owners to keep accurate records. This helps to ensure they declare the right amount of rental income and they have evidence for claims made,” it says.

“Secondly, rental property owners should only claim deductions for the periods the property is rented out or is genuinely available for rent. If a property is rented at below market rates, for example to family or friends, deduction claims must be limited to the income earned while rented.

“Finally, costs to repair damage, defects or deterioration existing on purchase, or renovation costs, can’t be claimed as an immediate deduction. These costs are deductible over a number of years.”

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