ATO Audit Focus for 2021

Wok Related Expenses

Generally speaking, there are three rules for Australians looking to claim work-related expenses on their tax return:

• You must have spent the money, and not been reimbursed for the expense
• The expense must be directly related to you earning your income (i.e. it cannot be a private expense)
• You must have a record of purchase (i.e. a receipt)

Due to the pandemic many employees have been working from home and the ATO is expecting working from expenses to be up again this year. The temporary shortcut method for claiming working from home expenses is still available this tax year, but taxpayers must have a log of the number of hours worked from home, like a timesheet to support their claim. If you are using this method you cannot claim a separate additional deduction for any other expenses incurred when working from home including laptops, phone, internet, and electricity, as it is an all-inclusive rate and would result in “double dipping”.

Because more employees have been working from home, the ATO is on the lookout for those claiming high amounts of home office expenses but still have the same amount of travel and clothing and laundry expenses as previous years.

The cost of travelling from home to work or work to home is not generally deductible for most people. It is considered private travel and not a claimable expense. If a taxpayer is working from home due to COVID-19, but needs to travel to their regular office sometimes, they cannot claim the cost of travel from home to work as these are still private expenses.

Capital Gains on Cryptocurrency

More than 600,000 taxpayers are now dabbling in crypto-assets according to the ATO. These tax payers will be hit with audits and penalties if their gains from cryptocurrency are not declared on their tax returns. Just because taxpayers think cryptocurrency is anonymous, is not a license for them to ignore the tax implications. The ATO tracks how cryptocurrency interacts with the real world through information from banks, financial institutes and online cryptocurrency exchanges, to trace it back to a particular taxpayer.

The tax office will be writing to taxpayers with cryptocurrency assets explaining their tax obligations and urging them to review their previously lodged returns, as well as writing to taxpayers to remind them to include their cryptocurrency gains in their 2021 returns.

People investing in cryptocurrencies must report a disposal of cryptocurrency for capital gains tax purposes if they:

• trade, sell or gift cryptocurrency
• exchanged one cryptocurrency for another cryptocurrency
• convert cryptocurrency to a fiat currency, for example to Australian dollars (AUD)
• use cryptocurrency to obtain goods or services