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It’s tax time. As the mad rush of Christmas approaches, it’s the perfect period to get your 2023 Australian tax returns in order. Before you ‘copy and paste’ information from previous years, note the Australian Taxation Office (ATO) has announced three key focus areas;
- Rental property deductions
- Work-related expenses
- Capital gains tax (CGT)
What does this mean? Keep accurate records. Common mistakes can include amounts of rental income not being reported, overclaiming expenses such as those which have not yet been paid, or claiming improvements to a property which is used for private purposes.
Within the scope of rental property deductions, the ATO is taking a closer look at interest amount claimed. Interest on a mortgage associated with an investment property is permitted as a deduction only when the mortgage was used to purchase the property or to improve/repair the property. If borrowings were used for any purpose unrelated to the property itself, the interest on those borrowings is not permitted as a deduction against the rental income from the property.
The ATO now have data matching capabilities which extend to rental property related data, including investment property loans data. This allows them to obtain interest and loan repayments from various financial institutions to identify discrepancies in tax returns lodged.
If you have salary income subject to Australian tax, the flexibility for the way we work now has resulted in a fresh set of ATO eyes assessing the legitimacy of work-related expenses. The shortcut method of 80c per hour, initially brought in during Covid, has now ended. This leaves only the fixed rate or actual cost methods available for use.
The revised fixed rate method allows a 67c per hour claim without a requirement to have a home office set aside for work. Depreciation of furniture and equipment is allowed in addition.
The application of CGT on all assets is being highlighted by the ATO. This includes, for example, an impact on a main residence exemption due to an Airbnb arrangement at the property or where a business is operated from home. The sale of shares or crypto currencies whilst overseas that were purchased when resident in Australia, are also taxable events that people may not be aware of.
Lastly, be aware of scams alerting you that you have an outstanding tax refund to claim. If you’re contacted by someone claiming to be from the ATO and are unsure as to their authenticity do not engage. Instead call the ATO directly on 1800 008 540.
In summary, it’s important to take time to work on your tax return, as individual circumstances are unique. Ilana Kramarov works closely with Australian expatriates, through their Singapore journey and beyond. If you would like to discuss your personal circumstances and get assistance with tax planning, please contact Ilana via email at firstname.lastname@example.org
This information has been prepared in good faith, is in the nature of general comment only, and neither purports, nor is intended, to be advice on any particular matter. You should not act or rely upon any matter or information contained in or implied without taking appropriate professional advice which relates specifically to your particular circumstances. Select Investors (Australia) Pty Ltd expressly disclaim all and any liability to any person (whether a reader or not) who acts or fails to act as a consequence of reliance upon the whole or any part of this information.
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