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ATO’s latest tax campaign: What you need to know to avoid the dreaded ATO tax audit

The Australian Taxation Office is targeting taxpayers who may have made mistakes on their tax returns and could be at risk of a tax audit. In this blog post, we will discuss what you need to know about the ATO’s latest tax campaign. We’ll cover everything from what triggers a tax audit to how you can protect yourself against penalties. So, let’s dive in.

Save the professional fees of an accountant and avoid the ATO audit process by correctly understanding your tax obligations

What could trigger a tax audit by the ATO?

The ATO has announced that it will be cracking down on work expenses, omitted income, and rental property claims in an effort to close the $8 billion tax gap it believes exists between the amount of tax that is paid and what should be paid. This means that if you have erroneously claimed work expenses, omitted income, or made incorrect rental property claims on your tax return, you could be at risk of a tax audit. However, it’s important to note that tax audits can be triggered by a variety of factors, not just these specific areas.

This crackdown is sure to cause stress and anxiety for many taxpayers. However, it is important to remember that most audits are not random. The tax office usually conducts an audit when there is reason to believe that a taxpayer has not complied with the tax laws. If you are selected for an audit, it is important to stay calm and cooperate with the tax office.

How can you protect yourself against a tax audit and penalties?

One of the best ways to protect yourself is to keep thorough records and documentation for all taxable income and expenses. This includes keeping receipts, invoices, bank statements, and contracts. In addition, make sure that any claimed expenses are fully justified and meet the ATO’s guidelines for work-related expenses.

If you have made a mistake on your tax return, it is important to address this as soon as possible. The ATO offers a voluntary disclosure program that allows taxpayers to come forward and rectify any mistakes before they are caught by an audit.

Whilst the ATO’s tax campaign may be causing some stress and worry, it is important to remember that as long as you are compliant with tax laws and have thorough record keeping, you should have nothing to fear.

Investing in tax software is also a great way to ensure accuracy on tax returns and reduce the risk of any audit activity.

What is considered a legitimate work-related expense?

Expenses must directly relate to earning your income and must have been incurred in producing that income. In addition, you must have a record to prove the expense. Some common work-related expenses include phone and internet costs, uniforms, tools and equipment, training courses, and travel expenses.

How to ensure you report your income correctly

Make sure to declare all sources of income on your tax return, including wages, investment income, and any foreign income. It’s important to note that some forms of income, such as cryptocurrency, may not be immediately apparent and must also be reported.

Get your rental property claims right

Property investors are once again in the ATO’s firing line, but have an extra tricky job ensuring they are up to speed with the plethora of tax law changes over the years.

Rental property claims must be for expenses that are directly related to the rental activity, such as advertising for tenants and repairs and maintenance. It’s important to note that you cannot claim expenses for your own use, such as private phone and internet costs. In addition, capital expenses such as property renovations cannot be claimed immediately, instead being claimed gradually through depreciation.

The big focus is of course interest on loans, and ensuring any funds used for personal use or principle places of residence are apportioned correctly.

Final thoughts

Funding of $80 million extends the ATO’s Personal Income Taxation Compliance Program to 2024-25 and is expected to yield $674 million from a crackdown on over-claiming of deductions and incorrect reporting of income so go digital to not become a statistic..

Following these tips and staying informed about tax laws can help protect you from the risk of a tax audit and penalties. Remember, it’s always better to be safe than sorry when it comes to tax compliance.

TaxTank lets you automate your tax return and ensures you get it right every time. Its secure document storage means you will never be caught short without justifiable proof of your expenses again. Make sure you don’t miss a single source of income with TaxTank’s amazing live bank feeds. Not only that, but you’ll also never miss a tax-deductible claim again!

Property owners will understand how time-consuming and complex preparing a tax return can be. That’s why they will be blown away by TaxTank’s depreciation and CGT tools, as well as its easy collaboration mode, which makes it super simple to work with your accountant as well as any co-owners.

Join the thousands of Australians who are using TaxTank and streamlining their tax returns. start with your free trial today.


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Important Tax Deadlines

For all incomes earned between 01 July 2023 – 30 June 2024.  

Tax returns can be lodged from 01 July 2024. You can prepare early with TaxTank so you know exactly what’s going on ahead of time.

For all incomes earned between 01 July 2022 – 30 June 2023.  

Tax returns are now OVERDUE.  

You can use TaxTank to get up to date and lodge with our partner accountants.

Tax returns are OVERDUE.  

You can use TaxTank to get up to date and lodge with our partner accountants.

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