Tax Time Tips: Look Out For These 4 Things…
As you are getting your information ready for us to prepare your 2021–22 income tax return, here is a short list of things that the Australian Taxation Office (ATO) is looking during this tax time.
If you currently have dealings in these areas, we recommend that you ensure that your documentation is in order, as we will follow up on these items.
Protective items during the pandemic
You may be able to claim a deduction for the cost of buying protective items, such as a face mask, to wear at work if:
- you are required to be at your place of work
- your employer does not provide it, and
- you need to wear or use the protective item because your duties bring you into close contact with clients.
If your private use of the item is no more than incidental to your protection from the risks you are exposed to while at work, you can claim the full amount.
Accommodation and travel expenses
Accommodation expenses can only be deductible if you:
- are travelling for work
- sleep away from your home overnight for work, and
- pay for the accommodation expenses yourself.
If this applies to you, you may also be able to claim travel and meal expenses.
However, you cannot claim a deduction for accommodation expenses if you choose to stay overnight at a location closer to your usual workplace or live at a location away from your home.
Rental property repairs, maintenance, and capital expenditure
The ATO is reminding people with rental properties about the differences between a repair and items that will be deductible as capital expenditure.
In particular, you need to be aware of the distinction between ongoing repairs and maintenance which keep a property in a “steady state” of repair, and expenses incurred on upgrading, improving, or changing the nature or functionality of the property. The latter expenses are generally capital and written off over a number of years.
Wash sales and artificial capital losses
Wash sales involves the disposal of assets such as cryptocurrency and shares just before the end of the financial year. After a short period, the taxpayer reacquires the same or substantially similar assets.
The ATO is warning taxpayers against engaging in wash sales to artificially increase their capital losses to reduce their expected capital gains. Effectively, a wash sale is disregarded for tax purposes, nullifying the capital loss.
Are you are planning to make claims regarding these items this year? Please be prepared to provide additional documentation so that we can get a clearer picture.
Contact us to arrange your tax appointment.