Tax Time 2024: Key Areas to Focus on for a Smooth Tax Return

As we are now in the midst of Tax Time 2024, the Australian Taxation Office (ATO) has emphasised three critical areas where many taxpayers may encounter issues. By focusing on these areas, you can ensure your tax return is accurate and avoid any potential delays or complications.

1. Work-Related Expenses: Ensure Your Claims Are Accurate

With many Australians continuing to work from home, it’s no surprise that work-related deductions remain a popular claim. However, recent changes to the ATO’s fixed rate method mean that accurate record-keeping is more important than ever.

What You Need to Know

Comprehensive Records Required: If you’re using the fixed rate method, you must keep detailed records of your working hours and any additional costs incurred, such as electricity or internet bills.

Three Essential Rules for Deductions:
1. You must have personally paid the expense and not been reimbursed.
2. The expense must directly relate to earning your income.
3. A record (like a receipt) must be available to substantiate the claim.

Note: Reusing last year’s claim without updating your records can lead to problems. The ATO may disallow your claim if your records don’t match the updated requirements.

2. Rental Properties: Avoid Costly Mistakes

If you own a rental property, the ATO is particularly vigilant this year. Data shows that 9 out of 10 rental income tax returns contain errors, often due to incorrect deductions for repairs and maintenance.

Key Points to Remember:

• Distinguishing Repairs from Capital Improvements: While general repairs, such as replacing damaged carpet, are immediately deductible, capital improvements, like installing a new kitchen, must be claimed over time as capital works.
• Accurate Record Keeping: Before lodging your return, ensure all records are complete and accurate, especially regarding repairs versus improvements.

Note: Consider consulting with a registered tax agent to navigate these complexities and ensure your return is accurate.

3. Income Reporting: Timing Is Key

As tax time is now upon us, it’s crucial not to rush your return, especially if you have income from multiple sources. The ATO advises waiting until all income details are pre-filled in your return.

Steps to Take:

• Wait for Pre-Fill: Most income, including bank interest, dividends, and other payments, should be automatically pre-filled by the end of July. Ensure this is complete before lodging.
• Verify Your Income Statement: Check that your employer has marked your income statement as ‘tax ready’ in myTax before submitting your return.

Reminder: While it’s tempting to finalise your tax return early, waiting until all pre-fill information is available can help you avoid errors and the need for amendments later on.

Final Thoughts

Tax Time 2024 is here, and with it comes the importance of getting your return right. By focusing on these key areas, you can ensure a smoother process and avoid common pitfalls. If you need assistance, our team at R J Sanderson & Associates is ready to help. Contact us today to make the most of your tax return and ensure accuracy.

For more information on the ATO’s focus areas, you can refer to the official ATO announcements here and here.