Heading into tax season, the ATO has highlighted areas of concern for individuals ahead of tax return lodgement time. High on the ATO’s watch list is work related expense claims that are significantly higher than expected. In particular, the ATO will be paying particular attention to claims that have already been reimbursed by employers and expenses that are, in fact, private. These items are not deductible.
TIP – You are entitled to claim deductions for some expenses that are directly related to earning your income. The expenses must not be private, domestic or capital in nature. If the expense is both private and work-related, you can claim deduction for the work- related portion.
The ATO will also keep an eye on rental property deductions. The ATO will be paying close attention to:
- Excessive deductions claimed for holiday homes.
- Spouses inappropriate splitting of rental income and deductions for jointly owned properties.
- Claims for repairs and maintenance shortly after the property was purchased; and
- Interest deductions claimed for the private proportion of loans.
TIP – You can claim expenses relating to your rental property but only for the period your property was rented or available for rent (e.g. advertised for rent). If part of your property is used to earn rent, you can claim expenses relating to that part of the property. You will need to work out a reasonable basis.