Time to read : 4 Minutes

Each financial year, the Australian Tax Office (ATO) reveals what it will take a closer look at. So what is the ATO cracking down on this EOFY? The list includes landlords, influencers and gig economy workers, small business owners, people claiming too many deductions when working from home, capital gains tax, and early release of superannuation.

Small business owners

At the Tax Institute’s Tax Summit in October 2022,  ATO second commissioner Jeremy Hirschhorn said small business was at the top of the ATO’s hit list.

Although he acknowledged most small business owners try to do the right thing, mistakes can happen. And with his estimate that small business is responsible for more than $12 billion of the overall $33 billion tax gap, the ATO is keen to get some money back.

Dodgy landlords

Access to the financial information of 1.7 million rental property investors from 17 of Australia’s biggest home loan lenders means the ATO can use new data-matching techniques to take a closer look at claims made by landlords in 2023. 

And they will be. 

The ATO’s focus will be on interest expenses. With as many as nine out 10 rental property investors making mistakes on their annual tax returns incorrectly claimed expenses, they want to remind people that you can only claim an interest deduction for the portion of the loan relating to producing your rental income – not the additional funds you drew down to buy a new car or take a holiday.

Early superannuation releasers

Early access to your superannuation is possible – but only under clearly defined and specific circumstances.

In January this year, the Australian Financial Review reported that the number of people disqualified for illegal access to their super had already exceeded the total number who had been penalised in the entire 2021–2022 financial year.

Those figures have prompted the current crackdown on people setting up self-managed superannuation funds (SMSFs) to illegally access their retirement savings, with ATO assistant commissioner Justin Micalehas revealing that “illegal early release” would be one of this financial year’s main areas of focus for the SMSF enforcement team.

Capital gains tax dodgers

It’s estimated that around 250,000 properties in Australia are listed as short-term rentals with online platforms Stayz or Airbnb. Is yours one of them?

Then you may need to pay capital gains tax (CGT).

Your primary residence is generally exempt from CGT. But if you’ve used your home (or another investment property) to rent all or part of it out as part of the sharing economy, CGT may apply.

To calculate your capital gain accurately, you should have kept records of the income-producing periods, as well as the portion of the property that is used to produce income.

Work-from-homers

From 1 March 2023, any Australian taxpayer claiming work from home expenses needs to provide more detailed documentation to back up their claims.

Previously, choosing from a number of different methods to calculate how much you could claim when working from home was possible. But not this time. There are limits on what you can claim and if you don’t understand them, make sure your accountant does.

Influencers and side hustlers

At a time when a growing number of Australians are exploring side hustles to help them make ends meet, it’s been reported that the ATO will also be looking at ‘gig economy’ income with a careful eye this financial year.

And while that means ride-share drivers should make sure their record-keeping is in order, social media influencers who receive gifts or payments for online content creation will also come under scrutiny.

Hobby? The ATO may not see it that way. When there is an intention to generate profit and activity is organised to help achieve that goal, it’s a business.

The bottom line

Although the ATO is fond of announcing a new list of crackdowns each financial year, the truth is that, no matter whether you are an employee, business owner or retiree, when it comes to what you earn and the tax you owe, honesty is always the best policy.

Getting audited by the ATO is no fun – and it can be costly.

Yes, you can lodge your own tax return directly with the ATO.  But, for the relatively small (tax-deductible) fee an accountant will charge you, it is often worth the investment to ensure that every box is being ticked properly and you are claiming everything you’re entitled to (without claiming things you shouldn’t).

It’s worth noting that every industry has its good and bad. Just because someone is an accountant and has the framed certificate on their wall as proof, it doesn’t mean they’re a good one with your best interests at heart. If you’re accountant shopping, get recommendations from people you know and trust and check their online reviews too.

Go deeper: ATO crackdown on early access to super

Financial disclaimer

The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.