The 2022 tax season is here and the Australian Taxation Office (ATO) is focusing on three key tax areas:
- Record keeping
- Capital gains from crypto assets
- Work related expenses
Record Keeping 101
Accurate record keeping is essential as the ATO can reject any deductions for unreasonable or unsubstantiated expenses. If you don’t have proof, you can’t claim it! Records can be diary entries, tax invoices, receipts or anything else that proves you incurred the expense and that it relates to how you earn income. The key to staying organised is to record the expense when it occurs and to be as detailed as possible.
Tools & Tips
→ You can use the ATO record keeping evaluation tool to see if you are accurately filling & keeping track, see tool here: https://www.ato.gov.au/Calculators
→ Records must be kept for five years. Keeping digital copies of the original is great way of backup.
Capital Gains From Crypto – When do I pay tax on cryptocurrency?
If you dispose of cryptocurrency you will need to calculate the capital gain or loss and state this in your tax return. This can include selling cryptocurrency for a fiat currency, exchanging one cryptocurrency for another, gifting it or using it to pay for goods or services. Transferring cryptocurrency from one wallet to another is not a CGT disposal if you still own the crypto coins. To work out the value of your crypto assets when you acquire or dispose of them you will need to convert their value to Australian dollars.
Tools & Tips
→ Your capital gain or loss can be calculated as: Sale Price – Cost Base = Capital Gain/Loss. You can use the ATO online calculator via your myGov account to work out your CGT.
→ Did you know if you are an individual or trust there is a 50% discount on the capital gains tax if you have held the crypto asset for 12 months or more.
Work Related Expenses
To claim a work related expense the deduction must directly relate to how you earn income, as stated on the ATO database: “to the extent to which they are incurred in gaining or producing assessable income except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.”
How to determine if it is work related or private?
Often this is where confusion arises, for example internet and phone services can be used for both private and work. If this is the case the usage needs to be apportioned between each and only the work-related percentage claimed as a deduction. Say you use your phone and internet 50% of the time for work related practices, than 50% of your usage bill can be allocated to work related expenses. The ATO does check usage in any audits!
Did you work from home during the COVID pandemic?
With most of us returning to the office after the pandemic the ATO will be focusing specifically on what is being claimed. If you claimed work from home expenses last year and returned to the office this year, there should be a reduction in your work from home claim.
How can 1st Stop Professional Services help?
Our team of highly qualified accountants know what deductions you are eligible to claim and assessing your capital gains from crypto, property or other assets.
If you require assistance to understand your eligibility, contact us for a discussion based on your personal needs.