Various Individual Tax Return Changes for 2019 & beyond

nicolemcmilllon on 21/06/2019 - 14:24
Last edited 21/06/2019 - 15:24 by 1 other user

Hi Everyone,

I will hopefully be doing my annual tax AMA on Sunday 30th June 2019 so please ensure to have your questions ready for then.

For now I wanted to share some tax changes/tips that may affect your 2019 income tax returns. I have tried to include as much as I can so please forgive me for rambling.

Work-related expenses (this is one of the biggest focuses of 2019)

Line entry deduction data will form part of the tax return for 2019-20. This means that in previous years, the ATO would only receive one number regarding a section of deductions. Such as $400 for "other work related expenses". Going forward, you will have to itemise, and the ATO will have access to view those separate lines that make up the amount, for example telephone, internet, keyboard purchase etc.

Important factors to consider when claiming work related expense.

  • that you spent the money and it was not reimbursed
  • that you have the records to prove the claim, or where receipts are not required, proof of how the claim has been calculated
  • that you have not automatically deducted up to the specified amount where the money has not been spent
  • that only the work-related portion is claimed where the expense relates to both work and personal use
  • that tools or items of work equipment that cost more than $300 are depreciated over their effective life.

Rental property deductions

I was advised that the ATO has doubled the number of audits scrutinising rental deductions. They will have a specific focus on over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others, and omitted income from accommodation sharing.

Ii have personally seen tax returns where travel to rental properties has been incorrectly included. This is no longer deductible and can not be claimed. In my experience, what usually happens, incorrectly claiming something as easily identifiable as travel to a rental property can lead to the ATO scruitinising more areas of your return.

Crypto-currency transactions

The ATO is now collecting bulk records from Australian cryptocurrency designated service providers as part of a data matching program to ensure people trading in cryptocurrency are paying the right amount of tax. If you have bought or sold crypto-currency, be aware of their record-keeping, reporting and tax obligations. This is going to be a nightmare for those that have bought and sold thousands of parcels during the year.

Employees of employers who are using Single Touch Payroll (STP) will not receive a payment summary (group certificate) this year. Instead, they will receive an income statement in their myGov account and their pre-fill. If you work for an organisation of over 20 employees, this will probably affect you.

Employers are required to finalise the abovementioned income statements by 31 July 2019, not 14 July 2019. To reduce the risks of mistakes and therefore amendments on tax returns, it is strongly advised to wait until income statements are ‘tax ready’ before lodging. Probably a good idea to wait until end of August before lodging to make sure all the information the ATO has on you is available in your prefill.

rivate health insurance statements are no longer required to be sent directly to policy holders. This information should be included in pre-fill information by mid-August. This is another reason to consider waiting to lodge returns until after that time if the information has not been made available to you.

The government is seeking to increase the low- and middle-income tax offset (LMITO) for the 2018-19 year. If the change becomes law, the ATO will automatically amend assessments and no action is required by individuals. As Parliament is sitting in the first week of July, you may wish to defer lodgment until the outcome of the Bill is known.

Negligence is not an excuse for an inaccurate return. When completing tax returns, the ATO will assume both the client and the agent has compared the return against last year’s tax returns, checked documentation and discussed with the client any information about investments and investment income.

OK thats enough for now.

Have a lovely weekend.

Financial

Comments

  • chumlee on 21/06/2019 - 14:35
    +9

    I'll have to stock up on popcorn and get ready for the good & stupid questions

  • arkie0 on 21/06/2019 - 14:53
    +3

    I keep reading the focus this year (as with previous years) will be on specifically - Everything.

    How will this affect me?

    • nicolemcmilllon on 21/06/2019 - 14:55
      +1

      The ATO has more money than ever to dedicate to audits. They also have more data matching sources than ever.

      Therefore, when discrepancies are found, or when algorithms flag a return for whatever reason, there are more resources than ever to review and possible investigate.

    • chumlee on 21/06/2019 - 15:01
      +4

      I reckon it's all talk.

      They probably have an old Dell desktop computer out the back office that checks tax returns randomly

      • nicolemcmilllon on 21/06/2019 - 15:06
        +5

        We have noticed that audits increase every year. The ATO def seems to have more information than ever. It may be unnoticed to the individual punter, but when you see hundreds of individual returns its easy to see the increase in scrutiny.

  • Domingo on 21/06/2019 - 15:38
    +1

    Work-related expenses (this is one of the biggest focuses of 2019)

    Are they really going to go hard on <= $300 total work expense claims?

    Assuming someone was taxed at 40%, the deduction would result in a taxable amount difference of $120. Is it financially viable to audit someone for a claim that is at worst case out by $120?

    • chumlee on 21/06/2019 - 16:08

      Probably send a please explain letter

    • nicolemcmilllon on 21/06/2019 - 16:12
      +2

      Most people are claiming over $1,000 in this section.

      Also, it may be a few hundred dollars, but when you add it up to millions of Australians, I can see why they want to stop it.

      There is also the psychological factors of auditing you once means you are less likely to over claim expenses in future years. It also means that people who are audited often tell others so it stops people in that way as well.

    • psyren89 on 21/06/2019 - 17:28

      It's also easier to go after people who owe small amounts than those who owe hundreds of thousands or more.

      • Domingo on 21/06/2019 - 17:48

        Surely there's a minimum threshold. Why bother spending x dollars to go after someone for y dollars when x > y?

        • joungs on 22/06/2019 - 22:51

          Deterrent

  • orangetrain on 21/06/2019 - 16:18

    Personal question; have you been audited? How often do you get audited? How through was it?

    • nicolemcmilllon on 21/06/2019 - 16:23
      +2

      Not myself, but I've been through over a hundred audits with clients over the years.

      Each audit is different and depends on what they are auditing, and sometimes on the reasonableness of the auditor. It could be a simple as checking an invoice, or as difficult as different interpretations of the law.

      If you are audited for expenses that require substantiation, they may ask for the invoice and the proof of payment. If they are trying to verify your income they may ask for bank statements.

      If you have been audited in the past, you are at a greater risk of being audited in the future. I have seen clients get repeatedly audit (even though they were doing nothing wrong) because they were deemed a high risk client.

      I think that the actual refund benefit of a deduction (based on your tax rate) is not even sufficient enough to claim expenses you aren't entitled to. If you claim $500 extra, you may get back $150 or $200. I don't think the stress is worth that $150.

  • Almost Banned on 21/06/2019 - 16:52
    +2

    This is BS
    The bloody government takes my money, keeps my money, then makes me wait at least AN EXTRA MONTH more than I should have to tp get my own money back because of the delay in health funds and employers lodging my information.
    And they pay me NOTHING in interest for them holding my money and making me wait to get it back.

    • kahn on 21/06/2019 - 17:05
      +3

      Damn, you really know how to tug at my heartstrings. Please provide details of of the blaircam charity fund so ozbargainers such as myself can donate to ease your suffering.

      • Almost Banned on 21/06/2019 - 17:07

        I'll set up a Gofundme.
        It'll be as popular as Israel Folau's.

        • Almost Banned on 21/06/2019 - 17:17
          +2

          Seriously though, I always lodge in July, and always get a refund.
          Now I won't be able to lodge until August - and will get no compensation for being forced to wait for my own money.
          You might not think this a big deal, but I would always rather have my money than let someone else have it - especially when they are not paying me any interest.

          • enigma48 on 21/06/2019 - 22:28
            +3

            @Almost Banned: Fair statement. Doing the math on a $1000 refund that's received 1 month later:
            2.5% annual interest rate, converted to one month: 0.21%
            0.21% of $1000 = $2.10

            That's barely a pair of eneloops. The stress isn't worth the $2 (to me), I'm not going to focus on it.

            • Almost Banned on 22/06/2019 - 00:08
              -4

              @enigma48: Yeah - you're not even close to the amount of my typical refund.

              • bradenpd on 24/06/2019 - 13:31

                @Almost Banned: Perhaps you should apply to the ATO to adjust the amount that gets withheld so you don't have this supposedly huge refund due?

    • Gerry H on 21/06/2019 - 17:13
      -6

      the problem is not them taking the money, its that they dont spend the money wisely. i dont mind a 50% tax if the gold bars grow on trees as a result of their spending and management. thank god labour didn't win, literally communism in disguise.

      • mskeggs on 21/06/2019 - 18:27
        +3

        Literally!

      • ThithLord on 24/06/2019 - 09:42
        +2

        thank god labour didn't win, literally communism in disguise

        Weird. According to basically ANY resource online (though I'm going to just link you to the first source on Google), Labor absolutely spanks the Libs in Economic management.

        Australia’s gross debt at the 2007 election was 4.9 per cent of GDP. That was the third lowest in the Organisation for Economic Cooperation and Development (OECD), the club of 36 wealthy, developed economies. Only Estonia and Chile carried less. A year later, after Wayne Swan had brought home the highest surplus in Australia’s history at $19.8 billion, Australia’s gross debt was down to 4.7 per cent of GDP, bettered only by Estonia on 4.5 per cent.

        By 2013, Australia’s debt had risen to 16.8 per cent. That was still third lowest in the OECD with only Chile and Estonia marginally lower.

        Fast forward to now. What has happened between 2013 and 2018 (Liberals came to power, shock surprise)? Of the 36 OECD countries, 18 have reduced their gross debt, two of them by more than 40 per cent of GDP. Another 12 have increased the debt by less than five per cent. Only three have increased it by more than ten per cent of GDP. Of these poorly managed economies – Australia, Mexico and Chile – Australia’s blow-out has been the highest, at a thumping 11.6 per cent of GDP.

        Thanks, liberals.

        • bradenpd on 24/06/2019 - 13:33
          +1

          'Great economic managers'

    • donbot on 24/06/2019 - 11:31

      Ever considered lodging a PAYG Withholding Variation Application if your refund is so big, that way you get the benefit of it throughout the year with reduced PAYG on your salary? No, I didnt think so. Yelling is MUCH MORE EFFECTIVE MEANS OF GETTING MY MONEY FASTER!

      As for delays in employers lodging your information? You should ask your finance team to lodge it earlier because you're in a hurry and their delay is costing you dearly. I'm sure they'll oblige. Either that, or they'll hold off lodging information until the last minute just to spite you.

      • Almost Banned on 24/06/2019 - 15:33

        I have actually. The problem is that I cannot work out with certainty in advance what adjustment should be made.
        Ozbargain is a strange place. They will fall all over themselves to save a couple cents on Eneloops, but seem to have no problem with the government holding their money for an extra month.
        I can ask my accounting team at work. Do you think my private health fund would also ensure they remit my details early? What about my bank?

        • mubd1234 on 04/07/2019 - 12:55

          My private health fund made all their details available yesterday, albeit not pre-filled and I had to access it online via their portal. Maybe switch funds if you're not keen on the lazy fund which takes 30 days to make the statement available to you?

  • Gerry H on 21/06/2019 - 17:10

    that tools or items of work equipment that cost more than $300 are depreciated over their effective life.

    can u explain more about this? how many years are they depreciated? for computers, phones, office supplies, and professional software.

    • imotit on 22/06/2019 - 00:16

      The ATO has prescribed specific useful lives for different capital assets. It's publically available just need to look it up for your particular item.

      • peteru on 22/06/2019 - 17:45

        Unfortunately those useful lives are nowhere near realistic. I've got a whole bunch of things that have been thrown out because their useful life is over (like laser printers that you can no longer buy toner cartridges for), but they are still on the books.

        Even worse, when I contacted ATO for help on getting the assets written off while wrestling with their POS online system, I was told that it appeared that I could not do what was needed and the best approach was to just keep it in the system and keep depreciating over the next x number of years. Alternatively I could pay a tax professional to help with it. Thumbs down ATO!

        • imotit on 22/06/2019 - 23:13
          +1

          I would have thought something like a laser printer would fall under the instant asset write-off threshold ($25k) assuming you qualify for simplified depreciation for small business.

          • peteru on 23/06/2019 - 15:47

            @imotit: Maybe these days, but I bought it before they introduced that scheme.

  • Emerald Owl on 21/06/2019 - 18:37
    +2

    The Australian government loves to waste more money on collecting tax than the value of the taxes collected. Itemising work expenses is going to cost so much more in processing. How about the government just simplifies the tax code and lowers it with the money saved. The Liberal party is not a liberal party. Even worse is the online shopping tax…

  • lainey13 on 21/06/2019 - 19:52

    Every year they say work related expenses are to be targeted… any changes in focus compared to previous years?

    • nicolemcmilllon on 23/06/2019 - 10:21

      No specific changes but with the increased funds the ATO has this year for audits, added to the fact they will now get itemised work related expenses there will be more scrutiny than ever.

  • Wombatt on 25/06/2019 - 23:36

    Dumb question I'm sure, but are there any obvious things that could be done to help your return (financially or otherwise) before the end of the tax year?

    • nicolemcmilllon on 26/06/2019 - 08:25

      Nothing drastic that can significantly help you. Remember, spending money on a deduction means you spend 100% of the amount, and it may (I stress, MAY) result in you recouping 35% (depending on your tax rate)

      Depending on what tax bracket you are in, you can save tax by contributing into super (this is not advice and the super laws are extremely rigid so you will need to speak to someone about your personal circumstances)

      If you need to buy small things from officeworks, stationary etc , once again its not going to be a big difference to your tax return.

      If you need private health insurance, its too late for this year, but you may want to get it from 1 July 2019 if you make over 90k, or combined 180k with your wife (adjusted for reportable super, fringe benefits and super contributions).

      • Wombatt on 26/06/2019 - 12:59

        That's great thanks. Looking into health insurance right now actually :)

        • Wombatt on 30/06/2019 - 11:36

          Quick one on health insurance if that's ok. In a defacto relationship (not married but living together as a couple) if one partner earns under $90k but together the couple earn over $180k do both have to get health insurance to avoid the levy or is it sufficient for just the partner earning over $90k to get health insurance to avoid the levy for the lower income earner on their tax return next year?

          • lainey13 on 01/07/2019 - 21:12
            -1

            @Wombatt: Health insurance and levy is per person. To get under the couple limit, you have to get couple policy. If not it's individual income, with individual policy required to avoid the individual levy.

  • d-hunterz on 29/06/2019 - 16:47

    Would they receive the trading data from Crypto exchanges from 2019 beyond and inclusive or since 2014?

    • nicolemcmilllon on 02/07/2019 - 13:56

      Not sure when they receive the data from, but perhaps from 1 July 2018.

      2014 it was still in early stages so I don't think they would have that data.

  • d-hunterz on 01/07/2019 - 14:14

    AMA?

    • nicolemcmilllon on 02/07/2019 - 13:54
      +2

      I will try to set it up on Friday, I've been super busy this week with a family matter.

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