ATO target areas for 2022-23 returns: rental property deductions; work-related expenses; CGT

May 19, 2023

The ATO has issued a media release setting out its three focus areas for what it terms “this Tax Time”, ie the lodgement of 2022-23 returns.

The first area is rental property deductions. The ATO states that it will look at rental income being left out or mistakes being made with property-related deductions.

The ATO will also be focused on interest expenses and ensuring that rental property owners understand how to correctly apportion loan interest expenses where part of the loan was used for private purposes (or the loan was re-financed with some private purpose).

The second category relates to work-related expenses. The ATO focuses on the changes to the work from home rates in the context of more people returning to offices than before. The revised rules for this year are set out in PCG 2023/1. The media release states that to claim working from home expenses as a deduction, taxpayers can use the actual cost, or the revised fixed rate method, as long as they meet the eligibility and record-keeping requirements.

The third category is CGT. The release addresses the main residence exemption in the context of service entities like Airbnb and Stayz. It states that such income producing activity may have a CGT implication. It also notes that all assets should be accounted for, i.e. “don’t fall into the trap of thinking we won’t notice if you sell an asset for a gain and don’t declare it”.