It’s that time of year again – tax season is just around the corner.  

Each year, the Australian Taxation Office (ATO) announces the key focus areas it will monitor more closely. These ‘hotspots’ are often areas where taxpayers are likely to make intentional or unintentional errors.  

Understanding the ATO’s compliance priorities is important for preparing your tax return accurately and ensuring you get the most value out of it.    

In this article, we explain the 4 areas the ATO is targeting in 2024 and offer some practical tips to make this tax season as stress-free and error-free as possible.   

Work-related expenses

Work-related deductions have increased over the last few years as more people work from home. The ATO responded by introducing streamlined ways to claim, including the fixed 67 cents per hour work-from-home (WFH) rate put in place last year.  

In 2024, the ATO will closely scrutinise work-from-home expenses and all other work-related expenses claimed by individuals. The most important thing to remember is that you must retain evidence of all your expenses, so good record-keeping habits are essential.  

Types of evidence to substantiate work-related claims can include:

  • Timesheets and work rosters to show your work-from-home hours (you may want to record your hours in our work-from-home deductions diary
  • Proof of your rent, rates or mortgage payments if you’re running a business from home 
  • Mobile phone and internet bills (note: you can’t claim these separately if you choose to claim the WFH fixed rate)
  • Receipts for dry cleaning and laundering uniforms 
  • Payslips for proof of union fees 
  • Motor vehicle logbooks if you’re claiming the 85 cents-per-kilometre flat rate for journeys up to 5,000 kms (you can use our 5000km diary to record your trips).  

Rental income

A recent ATO audit revealed errors in 90% of property-based returns, so the ATO will crack down on all investment property deductions this year.  

If you earn rental income, you must keep all invoices, receipts and bank statements relating to your property expenses. You’ll also need proof that your property was available for rent (e.g. copies of online rental listing or advertisements) to support your claims. 

Property deductions the ATO will be targeting in 2024 include: 

  • Holiday homes claiming rental status for times the property was not actually available for rent 
  • Immediate claims for the ‘repair of existing defects’ in a newly purchased rental property, as opposed to ‘capital improvements/renovations’ which are claimed over several years 
  • Excessive interest expense claims 
  • Property owners claiming borrowing costs on their family home as well as their rental property (i.e., ‘double dipping’) 
  • Incorrect percentages of rental income attributed to one party of a joint-owned property. 

Check out our investment property checklist for eligible deductions.  

Income from the sharing economy

If you’re one of the many Australians earning an income from a sharing service like Airbnb or Uber, the ATO will closely examine your return to ensure you’re correctly declaring your income. 

If you obtain work through a sharing platform (e.g. Uber, Airtasker or MenuLog) or generate income through the rental of assets (including renting out your home on a short-stay property platform like Airbnb or Stayz) your data may be shared with the ATO via third-party sources. This allows the ATO to cross-check the data against your individual return. 

Capital gains on cryptocurrency and investments

Capital gains on cryptocurrencies and investments continue to be on the ATO’s radar, so it’s important to understand the tax implications. If you’ve made capital gains from the sale of crypto assets, ensure that you accurately calculate and report these gains in your tax return. 

The ATO has a data matching program in place to identify taxpayers who fail to correctly disclose their crypto activity.  

If you buy, sell or hold other investments, such as shares, make sure you disclose all related activity. This includes dividend income as well as gains or losses made on any asset sales. 

If you buy and sell assets on a regular basis you may be considered a trader, which changes the taxation treatment of any gains or profits you make on your asset sales.  

If you’re unsure how to treat your investment activity in your tax return, make sure you seek professional guidance.  

Our top tips for avoiding errors in your tax return

Complex tax returns can be tricky, and no one wants to find themselves on the ATO’s radar. Here are our top tips for an accurate lodgement:  

  • Make sure you correctly classify all your claims according to the ATO guidelines. Your accountant can help you with this.  
  • Ensure you retain your records for all transactions. This includes keeping hold of digital receipts and logging your vehicle mileage and WFH hours. Your record-keeping system can be as simple as an Excel spreadsheet.  
  • Avoid exaggerating expense claims, even when there’s an evidence-free threshold (such as home office deductions or vehicle expenses). The ATO will pay special attention to this in 2024. 
  • Keep track of and report all forms of income, including occasional earnings, casual employment and investment gains.  
  • Understand any recent changes to tax legislation that may affect you. Your accountant can explain the changes that are relevant to you.  
  • Engage a professional to help you with your return, particularly if you have more complex financial activity to disclose such as rental income or cryptocurrency activity. 

How Davidsons can help you with your tax return

Book an appointment with our tax return specialists

Our team of personal income tax return specialists are here to support you, either virtually or at our Geelong or Torquay offices.  

Contact our team by completing an enquiry form, calling us on 03 5221 6399 or emailing via info@davidsons.com.au

Download our income tax return checklist  

Use our checklist to ensure you include all the required information for your 2024 tax return and make the most of any available tax benefits.  

Download our income tax return checklist for individuals 

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Disclaimer: The information provided in this article is factual in nature and objectively ascertainable and, therefore, does not constitute financial product advice. Importantly, the factual information that has been supplied does not take into account your personal circumstances, objectives or goals.