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ATO focus on 2007 Tax ReturnsThe Tax Office has advised that it will be paying particular attention to the following in 2006/07:
- Capital gains from assets sold to contribute to superannuation;
- Capital returns on shares, and capital gains or losses on share buy-backs; and
- Work related expenses (WREs), including motor vehicles, self-education, home-office, and travel expenses.
Each year, the ATO selects a number of occupations for specific focus because they have above average WRE claims, a high number of WRE claimants or because the ratio of WRE claims is high compared to the salary and wages. For 2007, the ATO will focus on:
- tourism, travel consultants and guides;
- fitness and sporting industry employees;
- construction tradespeople who are employees;
- guards and security employees; and
- a continued focus on mining site employees.
In 2007 returns, the ATO will be looking at:
- renovations claimed as repairs – such as remodelling of bathrooms and kitchens;
- claiming too much interest on loans that have a private component;
- claiming the full cost of an inspection visit when it is combined with a private purpose;
- claiming deductions for properties only available for rent part of the year;
- claiming the cost of land as a capital works deduction; and
- claiming depreciation on assets such as fixtures, instead of capital works deductions.
The Child Support Agency (CSA) is focusing extra attention on the building industry to identify builders who haven’t been paying the correct amount of child support.
The CSA will look at parents in the building trade where there is evidence a customer has reduced their income in order to reduce their child support liability.
The CSA can adjust a parent’s child support obligation based on their true financial situation. The CSA and the ATO will take a joint approach to parents who don’t lodge tax returns and are urging all builders with outstanding tax returns to contact the ATO on 13 11 42.
Is a property really your main residence?The main residence exemption is a valuable capital gains tax (CGT) concession, which can provide a full exemption from CGT on the amount received on the sale of a taxpayer's residence.
However, the taxpayer has to prove that the property was really their main residence.
A recent case shows how far the ATO will go to work out if a house really is a "main residence", because the ATO did not believe these particular taxpayers, and the case ended up before the Administrative Appeals Tribunal.
Through investigation and by the taxpayers' own testimony, the Tribunal found that:
- the only items that were moved into the house during the time they claimed it as their main residence were the main bedroom furniture, a TV, some casual chairs and table, some bar stools, a small amount of crockery and utensils, and some clothing and personal items;
- the taxpayers did not use the kitchen cooking facilities, choosing instead to use a portable gas cooking stove;
- there was no telephone installed;
- there were no clothes washing facilities;
- the electricity consumption was only about $20 for February to April and from April to June; and
- they did not amend their address details with VicRoads, Centrelink, the electoral roll or insurance or banking institutions.
Please Note: Many of the comments on this website are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.