ATO focus areas 2021

Every year the ATO advises taxpayers of the areas that will be a focus for particular attention in the tax return season. For 2021 the top items on the list are:

  • Cryptocurrency gains
  • Work-related expenses

Cryptocurrency gains
The ATO is concerned that many taxpayers believe their cryptocurrency gains are tax-free or only taxable when the holdings are cashed back into Australian dollars.

Last year, the ATO directly contacted around 100,000 taxpayers who had traded in cryptocurrency and prompted 140,000 taxpayers at lodgement.

Gains from cryptocurrency are similar to gains from other investments, such as shares. Generally, as an investor, if you buy, sell, swap for fiat currency, or exchange one cryptocurrency for another, it will be subject to capital gains tax (CGT) and must be reported.

CGT also applies to the disposal of non-fungible tokens (NFTs).

One of the biggest issues we are experiencing is the lack of transaction data available from exchanges and wallets. Many think the crypto exchange’s tax report is correct. We have discovered that they are completing wrong if you have transferred the crypto to a digital wallet outside of the exchange.

There are service providers popping up who will connect to your exchanges and wallets and prepare the CGT report for a small fee (for example Koinly are charging A$49 but you can get a report for A$40 with a discount code – contact me for one).

The ATO has created a cryptocurrency factsheet with tips and information on how capital gains tax applies to cryptocurrency.

Work-related expenses
Specifically vehicle/car deductions and travel claims. When you consider the COVID lockdowns and many employees working from home a lot more, the deductions are expected to decrease.

For FY2020 the ATO has said that the value of car and travel expenses decreased by nearly 5.5%.

The ATO has quite sophisticated data analytics that looks for unusually high claims such as where someone’s deductions are much higher than others with a similar job and income.

How COVID-19 has changed work-related expenses

Working from home expenses
The temporary shortcut method for working from home expenses is available for the full 2020-21 financial year. This allows an all-inclusive rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.

All you need to do is multiply the hours worked at home by 80 cents, keeping a record such as a timesheet, roster or diary entry that shows the hours you worked.

Remember – the shortcut method is temporary. If you want to claim part of an expense over $300 (such as a desk or computer) in future years, you need to keep your receipt.

We have found that it is rare that the 80c method is the best one to use. You can still use the 52c per hour method and claim those other expenses. With so much working from home more of the internet bill may be claimable for example. Under the 80c method, the 80c includes that cost.

Personal protective equipment (PPE)
If your specific duties require physical contact or close proximity to customers or clients, or your job involves cleaning premises, you may be able to claim items such as gloves, face masks, sanitiser, or anti-bacterial spray.

This includes industries like healthcare, cleaning, aviation, hair and beauty, retail and hospitality.

To claim your PPE, you’ll need to have purchased the item for use at work, paid for it yourself, and not been reimbursed. You also need a record to support your claim – a receipt is best.

We don’t need you to send us the receipt, just a summary, you can keep your bits of paper!

Clothing and laundry, self-education, car and travel expenses
The ATO saw a decrease in the work-related expenses for cars, travel, non-PPE clothing and self-education. They believe this was a result of the introduction of travel restrictions and working from home. They have said they are expecting this to continue on a downward trend.

Even though you might be working from home more than in the office you still cannot claim the cost of travel from home to work as this is still a private expense.