2022/23 ATO Key Focus Areas

The ATO have announced they will have 3 key areas of focus for 2022/23, being rental property deductions, work related expenses and capital gains tax.

Rental Property Deductions

There are three different categories of expenses that may occur if you own a rental property

·         Expenses you cannot claim

·         Expenses you can claim an immediate deduction on

·         Expenses you can claim over a number of years

Expenses you cannot claim include

·         Any expenses that were not incurred by you (the property owner) – these commonly include costs paid by the tenant such as electricity and gas

·         Expenses that were paid when the property was not genuinely available for rent

·         Travel expenses – this includes travel to inspect a property before purchasing as well as travel to inspect, maintain or collect rent for the property

Expenses you can claim an immediate deduction on include

·         Advertising for tenants

·         Costs associated with maintain the property such as repairs and maintenance, gardening, cleaning

·         Body corporate fees & council rates

·         Interest on Loans

·         Insurance

Expenses you can claim over a number of years

·         The decline in value of depreciating assets

·         Capital works deductions such as building an extension and structural improvements

The ATO have issued a guide to assist investors to determine what income and expenses should be included in your tax return.

Work Related Expenses

There have been a few changes when claiming work related expenses for the 2022/23 financial year, with the working from home hours seeing the biggest change. From 1 July 2022 the ATO have revised how you claim working from home hours. To claim a deduction using this method you are required to keep record of the number of hours you have worked from home during the financial year – this may be from your timesheet, roster, diary or other similar documentation.  Without record of your hours worked from home we are unable to claim a deduction using this method. For more information on this change or to download our working from home hours log visit our blog on the topic.

Capital Gains Tax

The ATO have raised concerns about capital gains on shares, crypto, managed investments and real estate not being declared in an individual’s tax return.

Cryptocurrency is a capital gains tax asset and is treated very similarly to shares at tax time. If you have bought or sold cryptocurrency or shares, it is vital that you understand your Australian tax obligations as you may be liable for capital gains tax.  

For real estate capital gains, the ATO’s key area of focus is the main residence exemption and ensuing it has been properly applied. For more information on the main residence exemption visit the ATO.