In a release last 21 June 2022, the ATO said it will be focusing on small business tax returns for 2021-22. In particular, the ATO is concerned about:

  • deductions that are private in nature and not related to business income, as well as overclaiming of business expenses (especially for taxpayers running a home-based business);
  • omission of business income, for example income from the sharing economy or new business ventures; and
  • record keeping-including insufficient or non-existent records that are needed to substantiate claims.

To help small business and tax practitioners “nail” their income tax returns, the ATO has released a tax time toolkit which provides guidance on (i) home-based business expenses; (ii) motor vehicle expenses; (iii) travel expenses; (iv) claiming deductions for the cost of digital expenses; (v) using business money and assets for personal use; and (vi) pausing or permanently closing a business.

Aside from the toolkit, the ATO also reminds small businesses to:

  • include ALL income-salary and wage of sole traders, income from investments, certain government payments or financial support, etc;
  • claim only what is entitled; and
  • be mindful of lodgment deadlines.