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Use data prefills or raise a red flag, ATO warns

Tax

Failing to wait for a prefill or altering form data risks putting clients under scrutiny.

By Josh Needs4 minute read

The ATO is urging tax agents to hold off on submitting tax returns until prefill data becomes available on 1 July. 

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ATO assistant commissioner Tim Loh said failing to wait for prefill to open before lodging tax returns or removing prefilled data would raise a red flag. 

Speaking on a TPB webinar he said that the ATO now had a high degree of data certainty, which meant clients should be able to provide tax agents with supporting evidence when wanting prefilled data changed.

The prefilling service allows tax agents to check the accuracy of a client’s tax return by cross-examining it with information the ATO has obtained from other organisations.

Prefilled data is obtained through third-party sources such as employers, financial institutions, private health funds and government agencies. Last year the ATO amended over 400,000 individual tax returns by using data that was available through the prefill service but was omitted. 

With an increase in people working from home the ATO will also be looking at work-related expense claims. The ATO said there were three rules when determining work-related expenses for clients: 

  1. They have spent the money themselves and were not reimbursed by their employer.
  2. The expenses directly relate to them earning an income.
  3. They have a record to prove it, such as a receipt.

The ATO said individuals claiming working-from-home-related expenses would be the main cause of problems this year, and cited issues such as claiming all home internet expenses or phone expenses, or even claiming clothing for working from home.

ATO said if a client used their home internet or phone for personal use outside work, such as watching Netflix, they would not be able to claim it in its entirety.

When it came to claiming trackies and clothes worn while working from home, Mr Loh said: “The only people who can claim pyjamas as expenses are B1 and B2 from the Bananas in Pyjamas.”

The ATO also warned tax agents that if a client claimed the Medicare levy exemption they would need to have obtained a Medicare entitlement statement from Services Australia, which had to be completed every year.

Tax agents are also being reminded by the ATO that their clients can no longer claim the net medical expenses tax offset. This is due to legislation that passed in 2014 that abolished the offset.

Mr Loh said that the ATO would also look closely at individuals whose deductions had not changed at all year-on-year when some variation would be expected.

The ATO has also advised tax agents to check the residency of their clients and any foreign income they may have received in the past financial year.

It said Australian tax residents had to declare income earned anywhere in the world, including foreign income received from pensions and annuities, business activities, assets and investments and capital gains on overseas assets.

The ATO is warning tax agents that if there are incorrect or incomplete details in returns processing may be delayed.

Use data prefills or raise a red flag, ATO warns
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Josh Needs

Josh Needs

AUTHOR

Josh Needs is a journalist at Accountants Daily and SMSF Adviser, which are the leading sources of news, strategy, and educational content for professionals in the accounting and SMSF sectors.

Josh studied journalism at the University of NSW and previously wrote news, feature articles and video reviews for Unsealed 4x4, a specialist offroad motoring website. Since joining the Momentum Media Team in 2022, Josh has written for Accountants Daily and SMSF Adviser.

You can email Josh on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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