The ATO is also cracking down on poor record keeping, and is closely watching work-related expenses as employees continue to split their hours between home and the office.

“Some people have changed to a hybrid working environment since the start of the pandemic, which saw one in three Aussies claiming working from home expenses in their tax return last year,” said ATO assistant commissioner Tim Loh.

“If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls,” he said.

Mr Loh said people could only claim the work-related proportion for items that were also used privately.

“For example, you can’t claim 100 per cent of mobile phone expenses if you use your mobile phone to ring mum and dad,” he said.

Mr Loh said people had three choices when claiming deductions for working from home:

• The all-inclusive 80c an hour “shortcut” method, which was introduced for Covid in 2020.

• The fixed rate method of 52c an hour covering home running costs but also allowing separate claims for phones, data, depreciation, stationery and other items.

• The actual cost method where detailed expense records must be kept.

Mr Taxman founder Adrian Raftery said the fixed rate method often delivered bigger deductions than the shortcut method.

“You may think 52c is less than the 80c shortcut method, but you will be doing yourself out of some dough,” he said.

Dr Raftery said people working long hours from home should not shy away from claiming it.

“If you are working 60 hours a week, make sure you are recording that 60 hours,” he said.

The ATO said it would be checking rental property claims – including short-term rentals and insurance payouts – and said it might ask for supporting documentation.

And it expects to see more capital gains and losses reported by cryptocurrency owners, whose transactions it tracks on crypto exchanges.

“We know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” Mr Loh said.

Dr Raftery warned that switching cryptocurrencies within a trading account was still a taxable event, and he had seen the ATO flagging these transactions with taxpayers.

The price of the biggest crypto, Bitcoin, has halved since November, but Dr Raftery said many people still had huge gains.

“People may have bought bitcoin at $5000, then it got to $70,000, and they changed some to Ethereum, but because they effectively sold the bitcoin they have a taxable transaction,” he said.

ATO’S THREE GOLDEN RULES FOR TAX CLAIMS

1. You must have spent the money yourself and weren’t reimbursed.

2. If the expense has a mix of income-producing and private use, you can only claim the portion that relates to producing income.

3. You must have a record to prove it.

Original article published here in the NT News on 16 May 2022.