Tax Alert // ATO's 'hitlist' for Tax Time 2019
10 areas to watch out for…
For employees and individuals
- Work related expense claims meet the ‘golden rules’
– you must have spent the money
– it must be for earning your income
– you must have a record
Focus areas for the ATO:
– false clothing and laundry claims
– home based business expenses
– car expense claims current and up to date logbooks - If working for a Personal Services Entity, income is reported as salary, deductions are correctly claimed and superannuation is paid by the entity
- Income from sharing platforms (eg. airbnb’s) is fully disclosed and any expenses claimed relate to the income earning activity
- Rental properties – ATO target areas:
– over claiming deductions for interest
– capital works claimed as repairs
– incorrect apportionment of expenses for holiday homes used by friends/family
– omitting income from sharing platformsFor small/medium business
- ATO target areas for income tax:
– not reporting all income – cash sales or recording income in business bank accounts
– poor records validating expense deductions
– claiming private expenses as business expenses
– mistakes in PAYG withholding and reporting – from 1 July 2019 these errors may mean no tax deduction! - ATO target areas for GST:
– no tax invoices for claiming GST credit
– incorrect classification of transactions
– calculation errorsFor trustees
- Family discretionary trusts – ATO target areas:
– Tax File Number (TFN) reporting is up to date for closely held trusts to avoid 47% withholding on distributions
– Family trus telections are valid and uptodate, sent to the ATO, and distributions and use of trust assets are within the family groupFor superannuation:
- Quarterly reporting of transfer balance account events for SMSF balances of $1million or more
- Crypto-currency transactions have been identified and reported by SMSF trustees
- Non or late lodgement of annual returns