Episode 21 — Top Tax Time tips for 2022

In this episode of TaxVibe, Robyn chats with Tim Loh, Assistant Commissioner, Experience and Government, Individuals and Intermediaries and Tax Time spokesperson for 2022, ATO, about the annual Tax Time program. They discuss:

• The top issues for 2021-22 including lodging early in July, record keeping & more.
• The 3 golden rules for claiming work-related experience
• Rental income and deductions (including Airbnb)

Host: Robyn Jacobson
Guest: Tim Loh

For more information about The Tax Institute: https://www.taxinstitute.com.au/

Transcript

 Robyn Jacobson:
Hello, and welcome to TaxVibe, a podcast by the Tax Institute. I'm Robyn Jacobson, the senior advocate at the Tax Institute and your host of today's podcast. We love the vibe of tax and here at the Tax Institute, we do tax differently. I'll be chatting with some of the tax professions, great thought leaders, who will share valuable and practical insights you may not hear every day. We hope you enjoy this episode of TaxVibe.

Robyn Jacobson:
I'm joined by Tim Loh, assistant commissioner experience and government individuals and intermediaries at the Australian Taxation Office. Tim's role is focused on improving the client experience for individuals, to make it easier for individuals to comply with their tax obligations, whether they choose to lodge themselves or through a registered tax agent. Tim is the ATO's tax time spokesperson for 2022 and is also the ATO's steering committee member for the Women in Law Enforcement Strategy Formal Mentoring Program, which works to promote women in senior leadership positions across a number of Commonwealth law enforcement agencies.

Robyn Jacobson:
Prior to joining the ATO, Tim worked at one of the world's largest mining companies, two international law firms, and a big four accounting firm. Tim holds a master of law, a bachelor of law, and a bachelor of commerce. Tim is a chartered tax advisor and admitted to practice in Victoria. Tim, welcome back to TaxVibe. We had a chat this time a year ago.

Tim Loh:
Hi, Robyn. Thanks for having me again.

Robyn Jacobson:
Our pleasure. Look, you've been doing the rounds of late. It is that time of the year. We've ticked over one July and we are into the official season called tax time. So excited once again to be able to have a chat to you, look at the priorities, how the ATO is going into this compliance season, and what are the top tax tips for taxpayers as they're preparing the tax returns this year.

Tim Loh:
Yeah, we're really looking forward to having a chat with you, Robyn. And yeah, helping out your listeners at tax time this year.

Robyn Jacobson:
So look, the question in tax time, many would say that it actually runs 11, 12 months of the year now. But what does the ATO regard as the official tax time season?

Tim Loh:
Yeah. Look, for self preparers, we obviously need to lodge your tax return between or 1st of July and 31st of October. But like you said, Robyn, tax time is really all year round tax agents. As many tax agents will know, they've got the lodgement program which means their clients are on the lodgement program and they have often longer to lodge, so typically until 15 May the following year.

Tim Loh:
So for anyone who's listening and is new to the industry, the lodgement program is designed to help registered tax professionals manage their workload with progressive lodgements over a 12 month period. Now the framework recognizes agents who have good practice management, lodge electronically, and are consistently on time. Now, something to note is that if your client has one or more prior year tax returns overdue as at 30 June, their current year tax return due date is 31st of October. However, if all overdue prior year tax returns are lodged by 31st of October 2022, the 2022 tax return will be due according to your normal lodgement program.

Tim Loh:
Now, if you or your clients feel overwhelmed or you're behind with your lodgement program, we're here at the ATO, we're here to help. So contact us as early as possible so we can work with you to find a solution. Now we understand that there are a range of factors that can affect you and your clients, and we have services to support you.

Robyn Jacobson:
Tim, a couple of observations about these opening comments. You talk about the typical lodgement date often being 15 May, where an agent lodges the return for you. But it's really important for everyone to understand that is the agent's lodgement date. IN other words, if you show up at your tax agent on the 14th of May, it's a bit unrealistic to expect them, along with all of their other clients, to have it all lodged by the 15th of May.

Robyn Jacobson:
So it's important for clients to understand when they're working with an agent, don't leave it to the last minute to dump it on their doorstep. Work with them and stagger their workload because that's what that lodgement program is designed for.

Tim Loh:
That's spot on, Robyn. Yeah, exactly right. It's really important, if you're a client, to make sure you really organized, you've got those records, and work with your registered tax agent, find a good time to get your tax return lodged.

Robyn Jacobson:
The other point you made was about some agents feeling potentially overwhelmed. Now, we are recording this amidst the fourth major flood crisis that New south Wales has seen this year. So once again, natural disasters continue to wreak havoc in parts of the country. But even beyond that, the pandemic, two years, there are still some agents who are behind in their '21 lodgement program. And yet now, the '22 lodgement program is upon them. So there are a range of support services available, but it's just so important to bear in mind that many have not had a break in such a long time, and they really are doing their best.

Tim Loh:
And our advice is, we understand that but it's also really important that you get in contact with us so we can work something out and find a solution that helps registered tax agents and their clients.

Robyn Jacobson:
All right. So let's turn to those taxpayers who are really keen to get their refunds. So keen in fact, that they don't wait for the pre-fill information to come through from the ATO, which typically takes a few weeks. What's your message for those who perhaps have even lodged their tax returns already in the opening days of July?

Tim Loh:
We always say lodging at the end of July is better because all of the prefill information is already included in your tax return. And that information's from banks, financial institution, government agencies, and health funds. And that really makes the job for the tax agent and the client easy and simple. All you need to do is effectively make sure you've got all your income included in your tax return, as well as making sure that all the deductions that you're entitled to as a client is claimed by your registered tax agent.

Tim Loh:
And what we see at the ATO is, when people do lodge early, we have twice as many returns that get stopped in July versus August. So that means that the return's reviewed because typically some income's been missing. That's why we always suggest that lodging at the end of July is better than lodging at the start of July.

Robyn Jacobson:
And also employers typically have until the middle of July to finalize their Single Touch Payroll reporting. And this is known as the income statement. So look, some employees may be very organized and they've already made their income statements tax ready, but employees don't necessarily have to do that this week. They've got you another week-and-a-half or so.

Tim Loh:
That's right, Robyn. Yeah, typically until the 14th July to have their income statements tax ready, as you said.

Robyn Jacobson:
So turning to the top issues for 21/22, you often speak of three golden rules. And the ATO has spoken of these rules for many years, in fact, so it's not new this year. But could you reiterate what you describe as the three golden rules for claiming work-related expenses?

Tim Loh:
Yeah. So in terms of work-related expenses, around 8.6 million Aussies claimed nearly 20 billion in work-related expenses last year. So that's a lot of deductions. We want to make sure your clients get it right the first time. And as you said, Robyn, we do have three golden rules that we want people to adhere to when claiming deductions for workload expenses. And that's, you spent the money yourselves and didn't get reimbursed. The expense is directly related to clients income-earning activities. And finally, and most importantly in my view, client has a record to prove it. So, digital invoice or receipts are normally the best form of record to have for your client.

Robyn Jacobson:
I think of those three golden rules, the one about expense must be incurred in deriving or in gaining or producing their assessable income. That concept is one that of course has gone to the high court on numerous occasions. In other words, it sounds simple enough but it's actually quite complex in understanding when an expense is related. How are individual taxpayers, particularly self lodgers, expected to understand when something's related?

Robyn Jacobson:
Because many taxpayers will say, "Well, I had to incur my transport costs to get to the office." And we know a lot of people are working from home and we will get to that. Or, "I had to wear these clothes because I had to wear work clothes." Or, "Because I had to incur car parking in order to get to the office and spend the day there." We all know that those sorts of claims generally aren't available. So how do we break down that message about when it's incurred in gaining or producing assessable income? And when people say, "Oh, but I wouldn't have incurred it if not for going to work." It doesn't necessarily make it deductible.

Tim Loh:
Yeah. Look, that's a really difficult question, Robyn, and that's why fantastic registered tax agents are there to help their clients resolve that. Obviously we've got some information on our website to try and provide, I guess, some common examples for people to determine. But as you say, a lot of these, the question about eight one has been decided by numerous high court decisions many years ago in fact. As you said, it's not an easy issue and that's why tax is difficult. And that's why registered tax agents are so important to the Australian tax system and will continue to be important in terms of advising their clients.

Robyn Jacobson:
So let's do a bit of a deeper dive into the working from home. It is a practice that has changed the way we work, primarily because of COVID. But now that offices are open again, we still find millions of employees continuing to work from home. So what does this look like in terms of the number of employees or the sorts of claims? And what methods are available both this year, that is 22/23, as well as when you're completing the 22 returns?

Robyn Jacobson:
So let's be clear when we're having our conversation around which year, because of course we're into 22/23, but we're now preparing our 22 tax return.

Tim Loh:
Let's talk stats and then we'll talk about the 22 return. And then we'll talk about the 23 return. But in terms of working from home deductions, they continue to be very relevant to millions of Aussies this 2022 year. Last year, for the 2021 tax return, one in three Aussies claimed working from home expenses, about 4.5 mil Aussies claiming those working for home expenses.

Tim Loh:
For the 2022 tax return, we expect very similar numbers in terms of people claiming their working from home expenses. And look, with people transitioning back to the office or continuing to work from home, it's really important that tax agents assist their clients to correctly claim their working from home expenses. As you know, there's three methods available to calculate the deductions and each of those methods have different eligibility and record-keeping requirements. And obviously give different outcomes for the client.

Tim Loh:
Now for the 2022 tax return, when you're claiming working from home expenses on behalf of your client, there's effectively three methods. I think everyone's heard me talk about the 80 cents per hour shortcut method numerous times. It's really the easiest and simplest method. We're not saying it's going to give you the best result for your client, but it's the one that requires the least in terms of record-keeping. You only need a diary or time sheet entries to prove the number of hours you've worked from home. And typically if you've been working full time, a client can claim about $1,500 in working for home deductions.

Tim Loh:
Now we've got two other methods, the 52 cents per hour fixed-rate method, which requires a dedicated home office space. And you can claim things like your phone and internet expenses separately, as well as laptops and iPads and the like, provided it's used for work-related purposes. And then there's obviously the actual cost method and that requires quite detailed record-keeping in order in use that particular method.

Tim Loh:
In terms of the methods available for the 2023 year. As many as people would know, the shortcut method ends on the 30th of June 22, but you can use it for the 2022 tax returns. Now, if your clients have been using the shortcut method for that 2022 tax return, as I said before, that method ends for the 2023 tax return. And you'll need to keep good records in order to utilize one of the two methods that will be available for 2023.

Tim Loh:
Now, when it comes to the 2023 tax return and the working from home methods that are going to be available, we're looking to modernize the working from home methods for the 2023 financial year. And we're going to be able to provide some more information about this later in the calendar year. And obviously we'll be consulting with key stakeholders to make sure we get that right. But in the interim, it's really important that if you're having your discussions or your meetings with your clients for this year's tax return, it's important to stress the message of keeping good records.

Tim Loh:
So our advice is to keep a record of all the hours that you're working at home, the receipts for all depreciating assets and equipment used when working at home. And records of the personal and work-related use of assets and working from home expenses.

Robyn Jacobson:
Yeah, Tim, on that point, I've made some comments recently in a few media outlets. Even though the ATOs looking at the fixed rate method, and I have no insight at the moment where this is going to land so even in consultation that's not been discussed yet, but where the rate may land or whether we will continue to have a dedicated office, I think these are things that should be reviewed. We've got increased costs of living. We've got far more people working from home and whether the dedicated office is still appropriate in the modern housing, that's all to be looked at.

Robyn Jacobson:
But regardless of where that lands, people should still keep a record now of the hours they're working from home. Because the deduction itself can be worked out later, what's needed is the actual record of the hours that are worked. And the reason you should keep receipts, you may say, "Well hold on, the fixed rate method's supposed to remove some of that record-keeping." If you keep receipt, you keep your options open. And this way you're in a position to later decide, not at the time the hours are worked, but when you actually lodge your return, which method's going to give you the better outcome.

Tim Loh:
Spot on, Robyn. You couldn't say it any better really. Look, it's one of those things, it doesn't matter what the method is, if you don't have records you're not entitled to any of the methods. So like you said, you need the record and it gives you the most flexibility to work out what gives you the best result come tax time next year.

Robyn Jacobson:
Now what about travel expenses? Because you're saying that we had roughly one in three employees were working from home or claiming working from home expenses. I assume that we're working from home as part of that. Then you would expect an inverse relationship, that car and travel expenses should be down because if they're working from home, they shouldn't be traveling as much. But having said that, business travel has certainly picked up this calendar year. So we might see a bit of an interesting relationship between working from home expenses and travel expenses.

Tim Loh:
Look, we do expect claims with car and travel expenses to reduce significantly this year, even though border restrictions have opened up. Because based on the data we saw last year, and I know things have changed a little bit, but people just weren't traveling as much because of those broader restrictions in the early part of last financial year. So, if you are claiming for your client's car and travel expenses at pre-pandemic levels and also claiming significant working from home expenses, look, we'll be closely looking at these returns. Because Superman can't be in two places at once, how can a client be?

Robyn Jacobson:
Also on the car expenses, Tim. I just want to remind some of our listeners, since I have seen this done at times, we have something called, for cars, either the log book method or the set rate method. Now those methods are only available to individual taxpayers or individuals who are in partnership. I have seen them applied in a company or a trust. So I did just want to remind everyone that if you've got a car that is designed by a company or a trust, it cannot have any private use.

Robyn Jacobson:
A car cannot be driven by a company or by a trust for a private purpose. In other words, it's only ever a business purpose and we have a whole separate bit of legislation called the FBT Act that deals with that private use. So I just want stress that, within a structure being a company or a trust, you claim 100% of the car expense and then apply FBT to any private use.

Tim Loh:
That's spot on, Robyn. And that's a great reminder for listeners to make sure that they're following that procedure.

Robyn Jacobson:
Clothing, laundry, and dry cleaning expenses. Now, with people working from home, I would expect to see less uniforms being claimed on this basis?

Tim Loh:
I think you're right, Robyn. That's what we will be expecting. And as many probably know, there isn't a deduction available for buying, hiring, repairing, or cleaning conventional clothing. So we are expecting to see a reduction because people have been working from home and haven't been wearing a uniform, especially with all the lockdowns that we've had, particularly on the Eastern seaboard.

Tim Loh:
So if you have had clients in industries that have ceased trading during the lockdowns this financial year, make sure you count for the time the industry was closed down when calculating deductions like laundry expenses for their compulsory uniform. One thing to note, because sometimes we often have to give this reminder, is that you can't claim things like active wear, your trackies, your PJs, or even your dog, just because you had to have one to keep your company during working from home.

Robyn Jacobson:
Absolutely. I mean, we've heard of people packaging up all sorts of things through deductions, like cost of buying a car for their mother or claiming a wedding. And you've really got to scratch your head as to how some of these are in any way deductible. And of course, they're not. All right, onto rental properties. There's a lot to unpack in terms of all the issues here. But what we'll start with is declaring on your income. And that sounds like a really basic point to make but any income you earn from a rental property has to be included.

Robyn Jacobson:
I did hear many years ago, people will often let out their holiday houses over the summer period. And I came back from a summer break many, many years ago, I'm probably going back 15, 20 years. And apparently there were some real estate agents who were suggesting if the rent was under $20,000, you didn't need to declare it because it was non-commercial. Now that's really blending in a really bad way, rental income which has to be declared regardless of dollar amounts with the non-commercial losses when you're in business, which is a totally different set of rules. So if anyone has any ideas that if it's a really small amount of rent, you don't have to declare it, that is not the case. So what does the ATO say on this?

Tim Loh:
From our perspective, it's really important that you include all your income from your rental property. And that includes short-term rental arrangements, insurance payouts and rental bond money that you retain as a landlord. One thing to note on your rental income, and I can't emphasize this enough, is really the importance of asking extra questions of your clients.

Tim Loh:
We understand that 84% of tax payers with a rental property lodge via registered tax agent. And when we do our random inquiry program, we do find a lot of mistakes that require adjustments in those tax returns. We heavily reliant registered tax agents to help us get this right. And it's really important, as I said before, and I'm going to sound like a broken record, but it is really about asking extra questions of your clients.

Tim Loh:
So for example, last week, I was on a ATO webcast for tax professionals, where we had an external tax agent as a guest. And the agent mentioned to me and the seminar that they always ask probing questions with their clients, particularly rental property owners. And one example that she used was where the client purchased an air conditioner and the delivery address on the invoice was to their home or principal place of residence in New South Wales, while the rental was in Queensland. Taking the time to ask that extra question and looking a little deeper can help your clients get their tax return right the first time. And at the same time, it also fulfills your obligations as a registered tax agent.

Tim Loh:
I guess what we're saying at the ATO is we're not asking you to be like Sherlock Holmes here. We just want you to ask those extra questions. And from our perspective, add value to your clients. And as I said before, get the tax return, right.

Robyn Jacobson:
Tim, I mentioned earlier the natural disasters we've had in the last 12 months. And they just seem to be recurring with unfortunately more frequency at the moment. That will, of course, lead to insurance payouts in many cases. So it might be perhaps for some rental property owners an unfamiliar situation where they've actually got a payout or they've received a benefit from an insurance policy. So it'll be very important for them to understand the tax treatment of that.

Robyn Jacobson:
And of course the benefit could be a cash payout, it could be paying a supplier to come and repair the premises. So you've really got to look at the nature of what's being paid out. Because is it assessable? Is it covering the cost of a new depreciating asset? There are going to be all sorts of different ways this is treated.

Tim Loh:
As I said before, it's about asking the question of your client and getting that information so you can make the correct assessment on behalf of your client.

Robyn Jacobson:
We've also got fairly complex rules now around claiming travel expenses. In other words, you generally can't claim travel expenses for rental properties that are residential. And there are also some new rules, and I'm going back a couple of years now, they started around 2018 I think that was, in respective claiming depreciation.

Tim Loh:
Yeah, that's right. Obviously, when it comes to travel expenses, you can't claim travel expenses in relation to inspecting residential premises. But there are a couple of exceptions if you're in the business of letting rental properties or you're [inaudible 00:21:21], got a Law Companion Ruling 2018/7, which runs through how we at the ATO interpret section 26/31. I'm not going to go into detail in this podcast about how that works, but leave that with your listeners to have a look at.

Tim Loh:
But in terms of deductions for property expenses, it's really important that you get that right on behalf of your clients. And some of the mistakes that we see at the ATO, and we see these every year and that's why we keep harping on about it, but there are a few things that we see people get wrong. And one of those is around the deduction space.

Tim Loh:
For example, a situation that we have is where your client borrows money or redraws on their loan for uses other than the investment property. So for example, like a new car or a holiday to Nusa, or a boat for example. Anything that's related to a private expense, you can't deduct interest related to that refinance.

Tim Loh:
Now, another issue that we see is where your client's property was rented out only for a part of the year, or only part of the property was rented out. You have to, again, put apportion of the interest component for the period that it wasn't rented out, or for the part of the property that is rented out.

Tim Loh:
And the other situation, which is becoming more frequent, is where clients have used a property or reserved it for themselves. So for example, letting friends or family use it for no cost or at mates rates, or place unreasonable conditions that restrict the likelihood of the property being rented. So to use an example like Airbnb, if you're customizing your rent upwards and overriding the Airbnb algorithm, say at Christmas, so you can use it yourself or your family can use it. That's going to be an example when your property isn't generally available for rent. And in that situation, your deductions are going to have to be apportioned.

Robyn Jacobson:
With Airbnb also, Tim, there is an issue that people sometimes get wrong. Obviously, when a property is fully rented, it's going to be subject to capital gains tax when you sell it. But often with Airbnb, it can be your own home that you make available for a period of time, or you make a room available in your home while you're still living in it. And some people seem to think that, "Oh, if it's less than six years, we don't need to worry about any of the CGT issues." In other words, the partial loss of the main residence exemption.

Robyn Jacobson:
Now not only is the rent always assessable, there's never a time when you don't pay tax on rent. But the ability to retain your full main residence exemption for up to six years when you rent it is only where you cease to treat the property as your main residence. So in other words, if you don't move your belongings out and you're still on the electoral role and the utilities are still connected and your clothes are still hanging up in the wardrobe, but you let it out for six weeks over the summer period because you could get some really great income from it, you are going to have a partial CGT liability when you come to sell it. And I think people don't fully understand the CGT implications for using Airbnb with their homes.

Tim Loh:
Yeah. That's spot on, Robyn. It's a trap for young players and it's something that we do see tax agents not get right sometimes for their clients. So yeah, spot on. It's something that you've got to really look at closely. And again, it goes back to asking those questions of your client, making sure you've asked those questions to make sure you can get their tax return right.

Robyn Jacobson:
Another one that people forget about from time to time, if you get to claim a deduction for the capital works. So you've done some capital improvements to the property and you can deduct those at 2.5% a year generally, then you don't get a double dip. You can't claim your deduction and then also keep that improvement in your cost base. So you have to reduce the division 43 amount that you've claimed off your cost base, which obviously increases your capital gain at the end. So do keep detailed records around that cost base reduction as you go. And that's for properties that are bought after May of 1997.

Robyn Jacobson:
Now crypto, I'll say emerging, I think it's emerged. Certainly around last year or the year before. So what are the main issues you're seeing at the ATO when it comes to people and gains and losses made in relation to crypto assets? Noting that particularly in the last few weeks, we've seen some quite significant falls in that market and people will have made some losses.

Tim Loh:
Yeah. Look, Robyn, I want to run through old terrain that you might have chatted with Tracy Dunn about in terms of an earlier TaxVibe podcast. But just generally speaking from our perspective at the ATO, crypto assets we look at is treated as any other investment asset. And for most people, crypto is going to be held as an investment and it's going to be held on capital account. Obviously we're aware of certain exceptions to that general rule. And that's obviously where registered tax agents come into play and they can help their clients work out if that's a scenario that they're in.

Tim Loh:
But for example, if your clients are receiving staking rewards or have DeFi arrangements and air drops, they're going to need to declare that as income. And to do this, make sure you add that on behalf of your client to other income on the tax return in the year that they receive it.

Tim Loh:
Now, when it comes to crypto and holding crypto as an investor, it's really important that you ask clients if they have disposed of any investment assets this year, not just whether they've invested in crypto. And I'll come back to that a little bit later, because it's only when a capital gain tax then occurs, as you'll know, that you need to include capital gains or capital losses in the client's tax return.

Tim Loh:
As you can appreciate, investments come in all shapes and sizes, and crypto's one of those investments. And if client has bought that crypto as an investment, if they've sold, swapped, or exchanged that crypto, that typically results in CGT event. And it's really important that your clients know that when there is a CGT event, they need to declare that capital gain or capital loss in their tax return.

Tim Loh:
Goes without saying that any capital losses that have been incurred during the year can be offset against other crypto gains or other investment gains that have been made, whether it's shares, ETFs, or property. And to the extent that crypto losses, capital losses, can't be offset in the current year, they can be carried forward into future income years.

Robyn Jacobson:
Tim, I noticed last week there was a media release issued by the treasurer and the assistant treasurer. It was a joint media release confirming the law will be amended to clarify the tax treatment. I think this is a really important point. A few years ago, the ATO issued some guidance around cryptocurrency and in particular Bitcoin. And the view formed by the ATO is that when you have currency, it must either be our legal tender in Australia, or it must be the recognized legal tender of another foreign country. And at the time, that was certainly not the case.

Robyn Jacobson:
But since then, the government of El Salvador has formally recognized Bitcoin as legal tender. So I know the ATO's been considering this, and a no doubt treasury, for the last little while. But last week, the government confirmed that the law will be amended to confirm that Bitcoin and other types of cryptocurrencies are not considered foreign currencies. And that means the treatment that you've just been describing will continue.

Robyn Jacobson:
They will still be predominantly CGT assets. There may be the rare circumstance that it can be a trader or a miner, and they can apply losses against their ordinary income. But in most cases, it's going be a capital gain or a capital loss made. So I think to provide certainty to all taxpayers, it will be good to see that clarification made in the law.

Tim Loh:
That's right, Robyn. And as you quite rightly point out, that clarification ensures that division 775 doesn't apply to Bitcoin. So yeah, spot on. Yeah. And I think that clarification just helps make it really clear to everyone and anyone advising their clients that crypto are treated in the way we've described over the past few years.

Robyn Jacobson:
So to some final comments in relation to the really sexy part of tax, and that is record-keeping. How do we get people excited about keeping records so that if they ever get a knock on the door from the commissioner, they can remove all doubt and say, "Here, ATO, I've got everything you need here."

Tim Loh:
It's a really tricky one, Robyn. Because it's not exciting in the media. No one wants to hear about record-keeping, right? Because it's considered to be boring. They want to hear about crypto and all the exciting sexier topics that us tax nerds love. But look, from our perspective, it's really important that you have those records because... And I look at it from perspective of at the ATO we actually want people to get deductions they're entitled to, nothing more, nothing less. And we want people to get the right deductions.

Tim Loh:
If you don't have a record or incorrect records, you just can't get the deduction. And if you are trying to claim it, it's considered to be stealing from each of us in the Australian community. So it's really important you've got those records, digital invoices and receipts are the best form of record. And if you have that, that's going to really help you maximize your tax return.

Tim Loh:
And it goes back to the point you raised before, Robyn, about when it came to working from home methods. When you've got really good records, it gives you the flexibility to choose what gives you the best result for your client. And when you talk about adding value for your client, being able to say, "Hey, you could use this method. But if you use this method with the records that you've got, I can give you a better tax return." That's a great opportunity to sell the value that you are adding as a registered tax agent. So that's, from our perspective, a really important thing.

Tim Loh:
And the other thing that we should say is that, when it comes to people claiming, we've got sophisticated data analytics, flags any taxpayer claims that stand out amongst their peers in the same industry and income level. So it sticks out like a sore thumb. Again, it goes back to the records. If you've got records, there's really nothing to worry about.

Robyn Jacobson:
From a practitioner perspective, I can point to dozens of cases that I've seen over the years, particularly through the tribunal and some that have even gone to the federal court, where the taxpayer became unstuck because of a lack of substantiation, a lack of record-keeping. And whilst it's not the really fun part of preparing your tax return each year and digging out all those receipts, and the more you store them digitally, the easier it is to be able to store them. But it's the first thing that the tribunal and the commission will look at when it comes to a tax dispute, when it comes to reviewing your affairs.

Robyn Jacobson:
So I'm a big advocate for removing doubt. And if there's a way that you can prove your situation, evidence what you've done and why you've done it, it's going to make it so much easier if you ever get that tap on the shoulder.

Tim Loh:
Exactly right.

Robyn Jacobson:
So in closing comments, it's this time of the year where the scams unfortunately prey on those who are vulnerable, perhaps ignorant, unaware, and don't have the awareness of what to expect from the ATO and even from their tax agents. So can you run us through, to wrap up, what the ATO will and won't do? Personally, I've had phone calls to say that there's a warrant for my arrest for all sorts of things, and it's all completely scam-related and of course I don't follow through.

Robyn Jacobson:
But for those who can't identify a scam, text, a scam phone call, or a scam email, and the ATOs competing with a lot of people who are trying to do the wrong thing here, how can someone identify if it really is the ATO contractor contact them?

Tim Loh:
Yeah, it's a good question, Robyn. I also get the same calls as well. So it's interesting when you get one of those calls.

Robyn Jacobson:
So you and I are going to share a jail cell?

Tim Loh:
That's right, that's right. But look, if you get a phone call saying it's from the ATO and it doesn't sound right, look, our advice is to hang up. We're not going to take offense to it. What we would suggest is you go to the ATO's website where we have a listing of all the current ATO scams. Or you could call us on our dedicated scam hotline, which is 1-800-008-540. And we can confirm whether or not that's a legitimate call from the ATO.

Tim Loh:
I think when it comes to emails and SMSs, typically at the ATO we won't include links to our ATO online services or to a myGov website. We'll typically ask you to do that manually, or directly go to that website. So from our perspective, our advice is to strongly not click on any links, even if it looks like a message that seems to come from a legitimate source. My strong advice is this, we want to make sure you get it right. And by doing that, it's really important that if you're unsure, just hang up or just delete the message if you've received one of these messages or calls from the scammers.

Robyn Jacobson:
So the ATO would never threaten the taxpayer?

Tim Loh:
No, we're quite friendly at the ATO. Look, we're never going to threaten jail, arrest, or deportation to anyone who we call. So that's a dead giveaway from our perspective that it is a scammer. In terms of how to protect yourself, it's really important that you know your tax affairs.

Tim Loh:
Sometimes for example, you might get the fake tax debt call from a scammer. But what we'd say to this is this, four out of five people actually get a refund so it's unlikely that you do have a tax debt. But the best way to check is to go onto the myGov web page, log into ATO online services and actually check for yourself what your tax affairs are. Or speak to a registered tax agent.

Tim Loh:
The other thing we say is, if you do see some of these scams, it's really important you tell your family and friends about it. Because it's really important that they stay safe from scammers.

Robyn Jacobson:
Thank you. And also to mention the ATO does not charge anyone to apply for an ABN or a TFN. Now, your tax agent may charge for their time in assisting you with that but that is separate. The ATO itself does not charge for either of those

Tim Loh:
That's right, Robyn. And if you do need to apply for a tax file number, you can do that on the ATO's website. It's absolutely free. It's as easy as making a cup of coffee. But like you said, if you want someone to help you, get a registered tax agent to help you with that.

Robyn Jacobson:
So it's early days in July, Tim. Throughout the weeks and months ahead, there'll be more information being made available by the ATO to assist people, prepare their returns?

Tim Loh:
That's right, Robyn. So, yeah, we're kicking off tax time this year. And yeah, look, we'll be looking to provide as much information as we can to registered tax agents, to help them with their client's tax returns. So yeah, stay tuned. We've got heaps of information coming onto our website and obviously be out in the media, talking more about tax time this year.

Robyn Jacobson:
And just to provide extra information for members of the Tax Institute, in our weekly TaxVibe newsletter from this week onwards, we expect to be providing you with weekly updates. The ATO does meet with the Tax Practitioner Stewardship Group every week, we're just waiting for the first lot of key messages to come through from the first meeting. But basically, this will summarize the key points, how the systems are going, and of course how lodgements are tracking. So we'll be sharing that information with you, week-by-week, for the next three to four months.

Robyn Jacobson:
So thank you so much, Tim. Great to chat to you again. No doubt we'll chat to you before this time next year, but I wish you on the ATO all the best over the next few months. And same to the profession as we launch into another busy period.

Tim Loh:
Thanks so much, Robyn. Appreciate the time.

Robyn Jacobson:
Thank you.

Robyn Jacobson:
Thanks for listening to this episode of TaxVibe. I've been chatting with Tim Lowe, assistant commissioner experience and government individuals and intermediaries, and the tax time spokesperson for 2022 at the ATO. To keep up to date with TaxVibe, be sure to subscribe, rate, and review wherever you listen to your podcasts. If you'd like to connect with us on social media, follow the Tax Institute on LinkedIn, Facebook, Instagram, and Twitter. You can join the conversation on our member only community forum at community.taxinstitute.com.au.

Robyn Jacobson:
Not a member of the Tax Institute? Join a collective voice of 15,000 practitioners at the heart of the profession and find out what the best tax professionals have in common. For more information, visit taxinstitute.com.au/membership. You can also contact us by emailing taxvibe@taxinstitute.com.au. We look forward to you joining us next time.