Tax time 2020 is like no other: millions are out of work and many more are working from home. Then there are the 2 million people who have dipped into their superannuation early.
Also read: The quickest way to get your tax return back
And it’s proving a headache for Australians: a new survey from H&R Block found 60 per cent of Australians are unsure of the entitlements they can claim this year, while 64 per cent have some stress when using myTax.
Additionally, one-in-four Australians make mistakes on their returns and miss out on refunds.
As H&R Block director of tax communications Mark Chapman told Yahoo Finance, lodging a tax return already comes with a “fair degree of underlying concern”, and Covid-19’s economic destruction has only exacerbated that.
However, the ATO will still be applying the same level of scrutiny to dubious tax returns and keeping an eye out for suspicious deductions.
Here are the six things the ATO will be scrutinising this year.
While you might have claimed uniform expenses or car usage in previous years, Chapman said the ATO will be monitoring how Australians are claiming these work-related expenses this year, as coronavirus forced millions to stay home.
“A lot of people will not be incurring those expenses over the course of the past few weeks and months, and the ATO is expecting that to flow through to lower deductions and claims,” Chapman said.
“So if your claims in relation to those items have not gone down, that will probably trigger a bit of interest.”
Similarly, the ATO will be expecting a leap in work-from-home expenses. But the key is to ensure that those expenses have actually been incurred when claiming them.
“The ATO will be looking for instances where people have potentially claimed those expenses but are not actually working from home.”
Rental property expenses
Chapman described this as a “big area” this year.
“People are going to be getting bigger losses in relation to their rental properties than in the past, this year,” he said, noting that the ATO will be watching to see if people are working out rental property claims correctly.
The sharing economy
The ATO has been putting a lot of resources into monitoring the sharing economy, which includes platforms like Airbnb and Uber.
“It’s absolutely crucial that if you’re earning some income through Uber or Airbnb that you actually declare that income,” he said.
“Some people are still unaware that they need to.”
Australians who have been dabbling in bitcoin over the last few years may be unaware they need to declare that for tax purposes, but Chapman said it’s another area the ATO has been focusing on.
“That [product] has caused all sorts of headaches from a tax point of view from people simply not including that income in their tax return. That’s another area the ATO is really keen to crack down on this year.”
JobKeeper and JobSeeker payments
The ATO issued a warning in June to Australians receiving JobKeeper, JobSeeker and early superannuation payments, reminding them to take care when submitting their tax returns.
JobKeeper and JobSeeker are both taxable but are processed differently come tax time. Here’s what you need to know about filing a tax return while receiving one of these payments.
“They’re definitely looking at those income streams,” Chapman said.
Early access to superannuation withdrawals
If you’re one of the 2 million Australians who have withdrawn their superannuation early, it’s critical that you have actually met the eligibility requirements.
To be eligible, you need to have become unemployed, be receiving JobSeeker or another benefit like Youth Allowance or a parenting payment, or have seen your working hours fall by at least 20 per cent. Sole traders whose turnover fell by 20 per cent or more are also eligible.
If you don’t meet these requirements but have withdrawn your super, the payment will be taxable and you will also be up for a fine of up to $12,600.