This tax season is in many ways a transitory one, as the economy moves to a post-COVID setting with a new Federal government responsible for finding a way to pay back historic levels of public debt.
Here’s what you need to know about your 2022 return:
1. Work from home expenses
You can choose from either the temporary shortcut (all-inclusive), fixed rate or actual cost methods, as long as you meet the eligibility and record-keeping requirements of the method chosen. Make sure additional expenses are not claimed that are already included when using the temporary shortcut or fixed rate methods. The actual cost method is more appropriate when you are required to work from home, as opposed to choosing to work from home.
2. Record keeping
You must have correct records to substantiate your deductions – receipts for work-related deductions, logbooks for car expenses or diaries for travel claims. The ATO myDeductions app is good, user-friendly resource for this purpose. Note that you can rely on credit card statements as proof of purchase, but larger value items should be backed up by a receipt.
3. Low and middle income tax offset
This year’s LMITO has increased to a maximum rebate of $1,500. The new Federal government might look at removing or reducing this popular offset in the October Budget.
4. Crypto assets
Disposals of coins, tokens and non-fungible tokens during the 2021–22 financial year need to have capital gains or losses declared. If you received staking rewards or airdrops, make sure to include these as ordinary income. If you are in the business of trading crypto, your profit or loss will need to be included on your tax return.
5. COVID-19 tests
If you are claiming a deduction for the cost of buying work-related COVID-19 tests, make sure they are eligible to be deducted from your taxable income.
6. Government disaster support payments
Make sure to check if your COVID-19 support payments and natural disaster payments need to be included in your 2022 tax return, as there may be different tax treatments depending on the payment.
7. Rental property and business income
With so many people earning freelance income during the COVID period, the ATO is on the lookout for undeclared revenue. If you received any income from a rental property or side hustle throughout the year, this will need to be reported on your return. This includes income from short-term rental arrangements, insurance payouts and bond money that was retained.
8. Unlodged prior year tax returns
If you have one or more prior year tax returns overdue at 30 June 2022, your 2022 tax return due date is 31 October 2022. If we can lodge all of your overdue tax returns by 31 October 2022, lodgement of your 2022 tax return can be deferred according to our normal tax agent lodgment program.
9. New categorisation of interest income
From 1 July 2022, the ATO will notify tax agents of an indicator advising them of whether their client’s bank interest record is ‘high-certainty’ data. If the indicator is negative, you will need to provide a reason for changing the record to positive before making the adjustment.
10. Exceptional or unforeseen circumstances
Support is available if exceptional or unforeseen situations prevent you from lodging your returns on time. Depending on the issues you are facing, you may be entitled to a lodgement deferral. Please do not hesitate contacting us before it is too late to make such a request.
Featured Image: Nick Longford, In Our Shadows, 2022. Mixed Media on canvas, 91.5 cm by 112 cm.