It’s always good to keep your records straight before the end of the financial year. Here chartered accountant GAIL FREEMAN guides her client through home office and rental property claims.

Eleni came to see me about the records she needed to keep for work and her rental property.

I told Eleni it was always a good idea to get her records straight before the end of the financial year. 

“I know that home offices are always an important issue and the ATO has specified the records that need to be kept,” I said.

“If you provide timesheets to your employer that is a sufficient record. Alternatively, you can keep a diary or electronic record showing starting and finishing times every day and exclude your lunch break. An estimate is not acceptable. If you don’t have these records, you cannot claim.

“Remember also that if you claim home-office expenses, using the fixed-rate method, you will not be able to claim for your phone, internet, stationery or computer consumables. But you can claim depreciation on your electronic equipment and office furniture.

“If you do not have a home office claim and you are claiming your phone and data you need to keep a log of use for a representative month and then extrapolate that across the year. 

“I have read a few tax cases recently where phone use was disallowed because the phone bill was in the wrong name. If you are claiming the phone bill in your company it is critical that the phone bill is in the company name and not in your personal name.”

Eleni said she was concerned about the home office as she only worked from home one day a week, but used her phone and data a lot.

I told her that if her phone and data claim was greater than her working-from-home claim, then she should just claim phone and data, there was no need to claim her working-from-home costs.

I then turned to her rental property with the news that the ATO was getting more and more information concerning rental properties. 

“These data match information received from property managers as a result of some testing done in 2021, which estimates that the incorrect declaration of rental income resulted in a loss to revenue of $10.2 billion,” I said. 

“They now also receive information from insurance companies.

“Among the areas of significance to the ATO is repairs. There are many cases on the topic of repairs. The one that comes up regularly is whether the item is a repair or a capital improvement. 

“A repair can be claimed in full, but a capital improvement has to be depreciated over several years, usually 40. 

“So when you have to make repairs, please provide us with the invoices so we can ascertain the status. 

“If you have extended your loan for a purpose that is not related to the property, for example purchasing a new car, the interest has to be apportioned as to a deductible component and a non-deductible component.

“I should also mention that as a result of changes made to the Tax Agent Services Act and the Code of Professional Conduct there is a greater obligation on tax agents to keep appropriate records and report significant breaches of the code to the Tax Practitioners Board. 

“In addition, you have to provide ID for verification purposes. You should expect to see more questions and more administrative obligations from July 1, when the new law starts.”

If you need help with record keeping or the new professional requirements contact the expert team at Gail Freeman & Co Pty Ltd on 02 6295 2844, email info@gailfreeman.com.au or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser. Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.