What’s in the ATO’s sights for 2023?

Every year, the tax department cracks down on certain areas related to individual and business-related tax returns.

Here’s what the ATO will be looking out for as people and organisations start reporting their income for the 2022/2023 financial year.

  • – Rental properties

One of the highest priorities for the ATO this year is to review deductions and claims made by rental property owners.

Accountants Daily reports that the ATO has identified issues of concern, such as:

    • excessive interest deductions,
    • incorrect apportionment of expenses between personal and rental use, and
    • inadequate record-keeping

If you own a rental property, work with your tax accountant to make sure your reporting is accurate.

  • – Work-related expenses

Similarly, the ATO is targeting work-related expenses, emphasising the need for taxpayers to claim only what they are genuinely entitled to. You can still claim legitimate expenses of course, but you need to be able to substantiate your claims with the appropriate records and prove that you need what you purchase in order to complete your work.

Work from home is one area the tax department will keep an eye on this tax time. With lots of people returning to the office, the ATO is expecting work from home claims to drop and not be a carbon copy of 2020 and 2021.

  • – Capital Gains Tax (CGT)

The ATO is also focusing on capital gains tax (CGT) compliance this year, particularly in relation to property transactions.

With rising prices in the property market, the likelihood of CGT obligations is also increasing thanks to obligations arising from property sales and transfers. Be prepared to have property transactions scrutinised if you have been buying or selling.

  • – Superannuation payments and wage theft

As the ABC has reported recently, the ATO crackdown is also focusing on non-payment of superannuation.

Not paying superannuation to employees in accordance with legislation is now considered wage theft, and employers may face severe penalties and potential criminal charges if they are found guilty. The ATO will collaborate with other government agencies to identify and address non-compliant businesses, ensuring that employees receive their rightful entitlements.

  • – Tax avoidance in family trusts

Family trusts have long been a target for the ATO due to their potential for tax avoidance. Yahoo Finance has reported that in 2023, the ATO is intensifying its focus on family trusts, specifically emphasising trust income distributions. The ATO aims to ensure that distributions are made in accordance with the trust deed and that any potential attempts to misuse trusts for tax minimisation or evasion purposes are detected and addressed.

  • – Side gig income

With the cost of living going up, many individuals have been seeking extra sources of income by working on the weekend doing Uber shifts, selling goods via an online business or monetising their social media profile as an influencer.

The ATO needs you to declare income from a side-hustle or second job so you can pay tax on the money you earn. The good news is you may also be able to claim related expenses. Take a look at the ATO’s tax tip for side hustle information sheet to find out more.

Get your tax return right to avoid scrutiny

Being honest and upfront is the best approach when working with your tax accountant. Declare all your income and your accountant will be able to let you know what you can claim and how you can minimise your tax bill.

Your tax accountant knows what the ATO is cracking down on and will make sure you have all the necessary information to help you avoid the time and costs involved with an audit.

Ready to complete an accurate tax return in 2023? Get in touch with Mobbs & Company today.

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