We’re in July, which means before we get busy with submitting our tax returns , we need to talk about what the ATO has got its eyes on this year.

You know what we’re talking about.

Each year the ATO drops their list of the un-hottest items that will pique their interest on our tax returns.

Because when it comes to filing tax returns, the line between legal and illegal deduction claims can become thin.

This year, the ATO’s got work-related expenses, rental properties, and income statements on its mind.

Work-related expenses

Since the pandemic, many office workers have established hybrid working systems, and work-from-home expense claims have surged.

In fact, last year there were over 8 million work-related deductions, and around half of those were working from home deductions.

Quick reminder: You can only claim work-related deductions for expenses that:

• Are directly related to your work

• Are ones where you’ve spent the money yourself and not been reimbursed
• You have records of to prove your expenditure

The ATO wants us to provide “comprehensive records” to back up your work-from-home claims, just like any other deductions. Think: invoices, calendar entries, a spreadsheet.

You can still use either the actual cost or fixed rate method, but keeping detailed records will make it easier for you to choose either method.

What does this mean? Check out the FY24 tax toolkit Academy

The ATO’s biggest gripe is seeing tax returns with work from home claims copy and pasted from last year. 

Yes it’s tempting, but it will land you on the ATO’s radar.

Rental properties

Get this: according to the ATO nine out of ten rental property owners are incorrectly filing their tax returns.

So the ATO’s got its magnifying glass out and ready to look for claims that might be inflated for the sake of a better tax benefit.

The ATO says they often see landlords making “mistakes” with claims for repairs and maintenance deductions. 

While general repairs and maintenance on rental homes can be claimed, “capital expenses” like renovations or improvements to the property cannot be claimed.

Income statements

It’s tempting to lodge your tax return as July 1 rolls around, but the ATO gets stressed out when we jump the gun.

Usually, all our income data hasn’t come through by July 1. 

Things like interest from banks or dividend income pre-populate on our tax returns but it can take a couple of weeks for those figures to pull through.

The ATO’s noticed a number of keen beans who have submitted their tax return without their additional income included.

Our best bet to filing an A+ tax return is to wait a few weeks until all our income data has been populated before filing that tax return.