ATO eyes shady WFH claims, wash sales and more


Sophie Venz* As Australians try to tackle the rising cost of living, the ATO has issued a warning over dodgy tax claims on working from home.

Australian tax office (ATO) warned taxpayers ahead of June 30 against making false statements that could expose them to scrutiny or audit.

Despite inflation hitting Australians and Australian businesses hard, the ATO has warned individuals not to consider claiming too many work-related expenses this year-end to combat the rising cost of living.

ATO Deputy Commissioner Tim Loh said ABC News that people trying to push the boundaries of work-related spending and those who don’t disclose or minimize cryptocurrency investments would be the ones targeted.

Work-from-home expenses have been at the top of the ATO watch list for some time, with CPA Australia resident tax expert Elinor Kasapidis warning against any attempt to claim for Tim Tams, dog daycare or Ugg boots in May.

Earlier this week, the ATO also released a statement urging taxpayers not to engage in “asset wash sales” in an attempt to artificially increase their losses and reduce their gains.

The ATO says it is “cleaning up the dirty laundry”, with wash sales being a form of tax evasion it will be watching particularly as it nears the end of the financial year.

Wash sales typically involve selling assets before the EOFY, such as crypto or stocks.

After a short period of time, the taxpayer then redeems the same or substantially similar assets, which is done to create a loss and offset any gain already realized – or supposed to be derived – in a tax return.

“A wash sale is different from the normal purchase and sale of assets because it is undertaken for the artificial purpose of generating a tax benefit for the current fiscal year,” the statement said.

“The taxpayer disposes of and redeems the asset for the deliberate purpose of realizing a loss of capital gains and obtaining an unfair tax advantage.”

“Don’t cut yourself off by engaging in a fictitious sale.

“We want you to count your losses, not have them removed by the ATO,” Loh said in the statement.

Amid work-from-home claims and warnings against wash sales, Australians have also been reminded that the shortcut method – introduced in 2020 during the pandemic – will end on June 30, 2022.

Australians who continue to work from home or hybrid work after this month will have to use either the fixed rate method or the actual cost method to claim work from home in the 2022-23 financial year.

*Sophie Venz is the coordinating publisher of SmartCompany Plus.

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