Australians are being warned not to put off getting their taxes in order as the End of Financial Year (EOFY) approaches, with the government targeting those making easy errors and filing returns late.

Those working in the gig economy or investing in cryptocurrencies must be particularly careful, tax agents said, while all workers can expect to have expense claims scrutinised closely for the 2023-24 financial year.

It’s the latest in what Perigee Advisers principal Lisa Greig called a post-Covid crackdown on workers that started last year with work-from-home changes, and will continue as the Australian Taxation Office targets a $8.7 billion tax shortfall.

“The days of the ATO being flexible are probably gone,” Greig said, warning that financial penalties for those who don’t file taxes on time will be on the rise over the coming financial year.

“I’m reading the riot act to my clients … if you don’t lodge on time the fine can be up to $1500.”

Australians who lodge their own returns and fail to file by October can be penalised $313 at first, and then up to $1565 if a return still isn’t lodged.

The deadline is longer when filing through an agent, running into 2025.

Work-from-home scrutiny

The threat of fines comes amid a broader crackdown on expense claims, with the ATO spearheading a post-pandemic approach to remote work.

During the dark days of Covid-19 lockdowns the tax office paused much of its debt collection program and oversaw generous work-from-home deductions that helped drive up total refunds.

But under a new revised fixed-rate method for remote work that came into force last year, Greig says some claim amounts plummeted from more than $1000 to only a few hundred.

The new method, which allows taxpayers to claim at a fixed 67 cent hourly rate, sparked some confusion last year when it was unveiled, particularly because of an explicit requirement to keep real-time records of remote work hours that tax agents said workers didn’t know about.

H&R Block director of tax communication Mark Chapman said Australians making expense claims this year need to be wary that they’ll need to provide such records.

“We expect the ATO to check claims thoroughly, particularly to verify whether taxpayers have a record of all their working-from-home hours over the entire tax year, in the form of timesheets, a diary or copy of work rosters,” Chapman said.

“Similarly, in relation to working from home, deductions for “occupation” costs like rent, rates and mortgage interest are under the spotlight as they are not allowable unless you’re actually running a business from home.”

Both Greig and Chapman said the ATO will be watching for people who try to claim expenses like their mobile phone and internet bills separately, which is not allowed under the new method.

Chapman said other focus areas include claims for work-related clothing, dry cleaning and laundry expenses, as well as overtime meal claims, union fees and subscriptions.

The tax office also believes that many Australians are incorrectly claiming small deductions under $300 without needing to provide receipts, Chapman said, suggesting this will be another focus area in 2023-24.

Confidence and proof

Chapman’s tip for Australians is to be “confident that you understand what you can and can’t claim” and that the “necessary proof” is provided to back up expenses related to earning income.

That may include invoices, receipts, diaries or rosters if you’re making a work-from-home claim.

Greig said a key factor to consider is whether any expense you have incurred is actually related to earning the assessable income you have reported to the ATO.

If even a portion of the expense is related to personal use, then that’s where you could run into trouble with the tax office, which will scrutinise how much of the expense is related to business.