ATO Focus for the FY26 Tax Return Season
Hello taxpayers!
The ATO have released their focus areas for the FY26 tax return season. The following are the main issues they are targeting and what this means for your tax return:.
- Deliberate over-claiming of work-related deductions – this is a broad ‘catch all’ area which includes items such as overstating work-related kilometres, claiming travel or accommodation costs which were actually paid by your employer, claiming working from home expenses when no work from home actually occurred, claiming tools etc without supporting documentation, and the list goes on!
- 2. Crypto currency is again high on the target list – any gains made on disposal of crypto assets (i.e., selling your crypto holdings for more than you purchased them for) need to be declared on your tax return and are subject to capital gains tax. The ATO has access to all Crypto platforms and can easily ascertain sales made in an attempt to avoid paying CGT.
- 3. Refraining from declaring income from merchant systems (e.g., Square, Zeller) – the ATO cross-matches data from merchant systems to income declared in tax returns, and any discrepancies will result in amended assessments and, in serious cases, the conduct of audits.
- 4. Lifestyle assets (yachts, expensive cars, luxury houses etc) owned by taxpayers not commensurate with income levels earned will be heavily scrutinised.
- 5. Paying personal expenses out of company funds – this effectively results in a loan from the company to the taxpayer and must be formally documented in a loan agreement with repayment terms and appropriate interest rates – otherwise the company will be subject to tax at the highest marginal rate (47.5%) as opposed to the company base rate of 27%.
These are just a few of the large target areas, however there are several more. If in doubt, please contact us at CJG services and we can guide you through the maze of compliance burdens this tax season.
If you would like some further guidance as to your particular tax situation, please reach out to us here at CJG services and we would certainly love to help.
