Robyn Jacobson
Hello and welcome to TaxVibe, a podcast by The Tax Institute where we peel back the layers of the Australian tax world. I'm Robyn Jacobson, your host and the senior advocate at The Tax Institute. We bring you the sharpest minds in the tax profession, digging deep into their unique insights and sharing nuggets of wisdom you won't find elsewhere, always keeping it real and interesting. So sit back and relax and let's dive into the world of tax, one conversation at a time. We hope you enjoy this episode of TaxVibe. I'm joined by Rob Thompson, Assistant Commissioner for Government, Experience and Tailored Support, Individuals and Intermediaries, and the official tax time Spokesperson at the ATO. A tax professional with more than 15 years' experience, Rob has extensive knowledge across several diverse roles in the ATO. Starting at the ATO in high-wealth individuals, Rob progressed to a compliance officer role, then worked his way into specialist task forces, policy implementation, and strategic programs. Rob has held the position of Minister, Council, Taxation at Australia's permanent delegation to the Organisation for Economic Co-operation and Development, the OECD, in Paris. Rob also holds a Master of International Taxation and a Bachelor of Commerce. Prior to joining the ATO, Rob worked in a managerial role for a not-for-profit organisation in New York, being a foundation. Rob, welcome to TaxVibe. This is the second year we've had a chat and it's great to have you back.
Rob Thomson
Thanks Robyn, glad to be back.
Robyn Jacobson
So, you've been doing the circuit, talking to just about every media outlet in the country. You're the tax time spokesperson. So what does this actually mean and what are the key messages that you're trying to get across at tax time? Why is this so important?
Rob Thomson
Yeah, Robyn, busy for myself, but I think busy for the ATO as well. You know, tax time is one of the busiest and most important periods of the year for us. And, you know, millions of taxpayers lodging their income tax returns. And so kind of my job as a spokesperson is to really try and help people get it right the first time they lodge, make them aware of like some of the key things that we're really focused on and opportunity to connect obviously with the community. and share some useful tips and information. But for a lot of taxpayers interacting with us is that one time of the year where they do interact with us. And so we just wanted to make sure that taxpayers get it right the first time they lodge, make them aware of some issues we're kind of looking at or have a focus on, which are mainly the areas where we see mistakes being made and just telling those people to just focus on those areas because with a little bit more attention, we think a lot of those mistakes could be avoided.
Robyn Jacobson
And we'll talk about some of those mistakes shortly and some of the common errors. But for those who are unfamiliar with tax time, how long does it run for? Why do we call it tax time?
Rob Thomson
Yeah, so the tax year runs from one July to 30 June. And at the end of the tax time, you can then lodge your tax return for the prior income year. So tax time starts on one July and goes to the 31st of October to lodge yourself, if you're lodging yourself. If you're using a registered tax agent, you may have more time to lodge, but you need to make sure that you're on the books of a registered tax agent by the 31st of October.
Robyn Jacobson
And just to explain to those who don't understand an agent lodgement program, if you're a tax agent and you're lodging hundreds or even thousands of tax returns for clients, you can't do it all in four months. So the work is spread evenly across the year. And that's why you may find if you have a tax agent, you might see a lodgement date of May or even earlier. It doesn't mean you should be providing your accountant with the information two weeks out from when the return is due. You should be doing it well in advance.
Rob Thomson
That's right, Robyn. You know, it's about managing the agent's lodgements through the year. It doesn't mean that the taxpayers shouldn't be getting their records to the agent as soon as they can.
Robyn Jacobson
Absolutely. So to ensure that tax time runs as smoothly as it can, how can the tax profession work with the tax office?
Rob Thomson
So obviously the ATO relies a lot on the tax profession, as you've talked about, help to get through the volume of tax returns and lodgements that we have. And we really do appreciate the role that the tax agents play in helping people to lodge their tax returns and help to get it right. For tax time to run smoothly, we're just asking that tax professionals continue to do the due diligence they normally do around their returns and to discuss with their clients what they can and cannot claim.
tax professionals are all well-versed around what people can and cannot claim. And so just ensuring that you're having those discussions with your clients and that they've got the appropriate records. And talking about records, the MyDeductions tool in the ATO app, you know, one way that people can keep all their records in one place is by downloading that, the ATO app and using the MyDeductions tool. Now people can use that whether they're lodging themselves or they're lodging through a registered tax agent. So it's useful irrespective of how you lodge your return.
Robyn Jacobson
That's good to know. You spoke of due diligence. Practitioners aren't required to audit their clients, are they?
Rob Thomson
No, they're not. You know, what goes in a tax return is obviously due to the responsibility of the taxpayer, but you know, tax agents will know based on the claims, based on what people are saying they can claim, you know, some things just might not look right. Discussing those, asking some basic questions where something doesn't look right and talking about the records they need to keep is all important.
Robyn Jacobson
The first tax return for 2025 was lodged one second past midnight and another 50 returns were lodged within the next four seconds. So clearly those people had, I won't say nothing better to do that evening, but clearly they were very prepared. They had it all done and they pressed lodge as soon as it ticked over midnight. That's pretty keen and we'll talk about maybe that's not always the best approach. But eight days into tax time, how's it looking so far?
Rob Thomson
So, Robyn, we're at the 7th of July now when this is being recorded and we have 760,000 returns lodged. So, a few returns lodged. We think it's a timely reminder. We talked about people lodging a second after, but we suggest people actually wait until the end of July to lodge. By then we will have prefilled a lot of data into the return for people, including their employment income, interest, private health insurance. And we find that people are more likely to get it right when they wait for that prefill than if they lodge early.
Robyn Jacobson
You talk about getting it right, if we actually cast our eye back onto last year's very early tax time, those opening weeks of July, the figures tell us that 142,000 taxpayers lodged returns early that were subsequently adjusted or reviewed for errors. That's not an insignificant number.
Rob Thomson
No, it's not Robyn. And this is why we're encouraging people to wait to lodge. We do find people are more likely to make a mistake when they lodge before prefills ready. As said before, we want to make sure people get it right the first time they lodge. We think that's better for everyone. And so we're just encouraging people to wait.
Robyn Jacobson
Very good. Now, what's new this tax time? Firstly, the tax cuts. So many people may remember that there were some tax cuts that took effect 1 July 2024. And some people may be across the fact that we've had some further tax cuts enacted. But let's put this in context. As part of the election campaign, in fact, it was literally a day or two before Parliament rose for the election this year, the government legislated two further rounds of tax cuts. So it is law. But these future cuts do not start to 1 July 26 and 1 July 27. So there actually no changes taking effect from 1 July 2025. But let's not confuse the 25-26 financial year with what we're talking about today, which is lodging returns for the 24-25 year. So there is a tax cut or a change in the rates for 24-25. Now, deductions, of course, are always a hot topic. They're always on the ATO's radar. And car expenses are still one of the most commonly claimed work related expenses. So can you tell us more about this?
Rob Thomson
Yeah, so last year we have full figures for as the 2022-23 income year Robyn, but based on the D1 claims we saw there, we saw around 3.8 million claims for car expenses in that year. And most of those were using the cents per kilometre method. So when claiming for the 2024-25 income year, if people are using the cents per kilometre method, that rate is now 88 cents for every work kilometre. This has increased from 85, the year before. Now if people are using that, just a reminder that does cover all the costs associated with your motor vehicle. Fuel, rego, decline in value. So if people are using that method, just a reminder that they can't claim those expenses somewhere else on their return. The alternate is the log book method as well, which remains unchanged. No changes to that from last year.
Robyn Jacobson
I would make the point Rob that, you're correct when you say, that you can't claim the rego in the insurance and the servicing because that's embedded in the 88 cents rate. But things like toll expenses is not considered a car expense. So if someone has incurred a toll as part of traveling for work then that would be claimed as a D2 travel expense as opposed to a D1 car expense. So it is important to characterise the expense correctly.
Rob Thomson
That's right, Robyn, and that's why we're encouraging people if they are using that method to make sure they understand what's in that method, so they don't claim that separately on their tax return, but other expenses that are related to work, then obviously claiming them at the right label is important.
Robyn Jacobson
Another catch I find is that if you're borrowing someone else's car for work purposes, you can't claim that as a D1 car expense because to claim it D1, you must own or lease the vehicle. So if you're using someone else's car, that is a D2 travel expense. Still deductible, but you've got to claim the actual cost, which might be, for example, the fuel outlay.
Rob Thomson
Yeah, this is why I say if you're not sure, have a look at the ATO website, feature a registered tax professional around your claims and they can help you make sure that you're putting it in the right box, getting the right claims, but also having the right records as well. Robyn, we find one with the fixed rate method is that people do need to be able to explain how they've come up and show you how they've come up with the amount that's under 5,000 kilometres if they're using the fixed cents per kilometre method. And so people needing to be able to substantiate that is, is important when we come and ask.
Robyn Jacobson
Now if you happen to drive an electric vehicle, you're not doing too much refuelling down at the service station. So, what are the rules and what's the ATO's approach around electric vehicles?
Rob Thomson
That's correct. You don't need fuel, right? Well, it does depend, right? So, we've updated the guidance as it relates to a methodology for plug-in hybrid electric vehicles. So from 1 July, 2024, if you do own and use a plug-in hybrid electric vehicle, you can use the EV home charging rate to calculate the cost of charging your plug-in hybrid electric vehicle at home. So to use that rate of 4.2 cents per kilometer. and claim the cost of your electricity. There's a few things that need to happen, need to satisfy. So you need to be using the plug-in hybrid electric vehicle for gaining or producing your assessable income. You need to incur the expense from charging the vehicle at home. You need to have kept the relevant records for the income year. So, but you can also alternatively be using the logbook method or claim your actual work related vehicle expenses as well. But there has been a change this year for the plug-in hybrid electric vehicle cars.
Robyn Jacobson
So importantly, you can't use the 88 cents rate on an electric vehicle because that's designed to reflect the fact that you're paying rather expensive amounts on fuel, which is not the case for these electric vehicles.
Rob Thomson
That's right.
Robyn Jacobson
All right. So another area that attracts a lot of attention is working from home. Now, there was a massive shift across the country to working from home during the pandemic. But that's many years behind us now, yet we've got the legacy of many employees, I would suggest possibly even millions across the country, either permanently or on a partial basis throughout the week, continuing to work from home. So can you walk us through the ATO’s current approach on this?
Rob Thomson
Everyone, so if you are working from home, there are two methods you can use to claim your working from home expenses. Now, reclassify working from home is actually carrying out your duties. So it's not, you know, just occasionally checking the email. You know, it is actually carrying out your work duties. So there's the fixed rate method, which allows you a cent per hour for every hour you work from home, or there's the actual cost method. So for the fixed rate method, that rates now increased to 70 cents per work hour you work from home. from 1 July 2024, so for this tax time for those lodging. The method itself remains unchanged, though it's just the rate that's changed. So that does cover your running costs from your electricity, your phone and your internet. So if you're using that method, you can't then claim those separately on your tax return. To use the fixed rate method, you have to have records of the total hours you've worked from home for the whole year. Now, how you record that, it's up to you. Spreadsheet, diary, we know. Even some employers, you know, work recording systems now allow you to record that as long as you've got the records that will satisfy that. You also need to keep a record of at least one document of each type of expense you've incurred in the rate. know, a quarterly electricity or gas bill, et cetera. So that's the fixed rate method. The actual cost method is a little bit more complex. You actually need to claim the exact cost you've incurred. So you'll need to have receipts and records for each type of cost that you're going to incur to show the work versus private portion of each expense. Now, don't forget additional to that under each method, if you are still buying your computer or your printer, ⁓ then you still can claim the declining value of those separate to either method that you're using.
Robyn Jacobson
So importantly, you've got to keep an actual record of actual hours worked. There is still the ability to run what we call a four-week diary, but this is only where you're claiming internet or telephone under the actual expense’s method. And there is an ATO approach that for reasons where bills don't exactly articulate every single phone call these days, it can be used for that. But if you're using the fixed rate method, where the telephone and internet is embedded in that 70 cents per hour, you can't use an approximation or some sort of estimate or a four-week diary. It's got to be that record of actual hours worked.
Rob Thomson
That's right, Robyn. And I think your call out is a good one about some of the methods that you can use if you're using the actual cost method. And so if people are using that method, make sure that they've looked at what records they need to keep for that one. What we would say is you can use whatever method gives you the best outcome as long as you've got the records to back it up.
Robyn Jacobson
It's great that we've got the flexibility to do that as taxpayers but the flip side is how do know which is the best method unless you run both calculations. So you actually got to keep if you like two sets of records get to the end of the year work out which is the better one if you can be bothered doing that. Now if you don't want to do that you just use the fixed rate method and it's nice and simple.
Rob Thomson
That choice is there for taxpayers, Robyn. You know, some people might want to run both. Some are happy to go with just the fixed rate method. It's totally up to people as long as they've got the right records.
Robyn Jacobson
Yep. Now, there are always some golden rules and common errors that you see when it comes to claiming deductions at tax time. What advice can you offer to our listeners in this space?
Rob Thomson
So I think most of the mistakes we see when it comes to work related expenses are kind of poor record keeping. So they can't substantiate the claim or they don't have the right records to substantiate the claim. A lack of connection between the expense and what the person does for work. So the income they're generating and also not apportioning the expense to count for any private use. So we always want people to remember to follow the three golden rules, Robyn, if they're claiming a work related expense. That is that they have paid for it themselves and they weren't reimbursed by their employer. The second is that the expense directly relates to the income they're earning. And the third is they have a record, normally in the form of a receipt to prove it. Now, some common areas we do see include things like people claiming everyday clothing, meals or drinks consumed at work, childcare, and even rent at times. And these are generally private expenses and can't be claimed even when your employer might require or expect you to purchase some of those. So just a reminder, you can only claim the expenses in performing your work duties and you can also claim expenses when you're looking for a new job as well. So just a reminder, it is related to the income you're currently earning. So not if you're trying to obtain qualifications to get to a new job. But what we're doing is we're encouraging people to have a look at our occupational specific guidelines. There's 40 of them. They'll tell you what you can and cannot claim, relevant to your job. So you can make sure you claim everything you're entitled to, but no more. But they also tell you the records that you need to keep.
Robyn Jacobson
Rob, it's often this time of year where we hear the really extraordinary stories. What are some of the more outrageous claims that the tax office see?
Rob Thomson
Some ones that we did see people try and claim this year, Robyn, we did have a truckie who tried to claim their swimwear, obviously got hot on stops when they're doing long haul. I wanted to go for a dip. your togs are private in nature, Robyn, you can't claim them when your tax return. We had a mechanic that tried to claim their air fryer, TV, gaming console, vacuum cleaner as work related expenses. They're obviously private in nature. And probably my favourite one, Robyn, is we did have. We did have someone that tried to claim their engagement ring as a gift deduction on their tax return. Now, obviously that's personal in nature and not deductible.
Robyn Jacobson
I wouldn’t have thought their partner was a deductible gift recipient.
Rob Thomson
I know neither did I, Robyn. We also wondered if it was deductible, which it isn't. We'd have to apportion over the life of the marriage. know, who knows? But anyway, it’s private in nature and not deductible anyway, so.
Robyn Jacobson
All right. Now, how do we make sure that you're properly tracking and keeping records? Because this seems to be the essence of having valid claims, not just that you've incurred it and it relates to your employment, but the record keeping is such an important aspect of it. It's also what I'd call the really dry and interesting part of it. Who wants to keep records? But without records, you haven't got a basis for claiming. So talk us through this.
Rob Thomson
Yeah, Robyn. So, you know, as you said, probably not the most exciting issue in tax, but a really important one for making sure that you can substantiate your claims. So if you are claiming a deduction, you need to have a record. Now, a lot of the time that's in the form of a receipt, which is written evidence from your supplier that you've paid for it. So it'll need to include the cost, the name of the supplier, the date it was purchased, the nature of the product or service, and then the date the document was produced. So it does need to have those things. A bank or credit card statement on its own normally doesn't suffice as substantiating the expense.
Robyn Jacobson
Why is this?
Rob Thomson
Because it just doesn't have that information, Robyn. I was talking to a tax accountant about this a few years ago and he's like, well, what else would my trade be buying from BP? You know, other than fuel? I'm like, don't know, chocolate milk, sausage roll, you know. So this is why it's important that it has those details. There are, as we talked about working from home and motor vehicle, there can be other record keeping requirements associated with those expenses that people do need to be aware of. Also records fade, right? So people can keep them digitally, if they want. And again, probably a call out for the or shout out for the MyDeductions tool in the ATO app as being a good way that you can keep all those records in one place and share them with your tax agent or use them when you lodge online. But really it's about having the right records.
Robyn Jacobson
All right, what resources does the ATO provide to help taxpayers get it right first time?
Rob Thomson
We've talked about the occupational specific guidelines. So they're a really good resource specific for people for the industry. They can understand what income they need to include, but then what deductions they can claim relevant to their job and the records that they need to keep associated with those. then so there's those. And then we also have seven additional PDF posters on our website as part of our tax time toolkit. That talks about some of these common deductions we've talked about, like working from home and cars. so ato.gov.au/taxtimetoolkit can be a good resource. And, you know, I think the occupational specific guidelines are good for tax professionals as well, because they can give them to their clients and their clients can then have something to refer to during the year around, is this something I need to keep a receipt of and can make it easier at tax time.
Robyn Jacobson
Rob, I think it's worth reminding everyone too that the ATO can and does talk to employers about claims. So let's say you've got an individual who makes a claim for motor vehicle expenses or travel expenses or whatever it is and then the ATO talks to the employer and the employer says, no, that person never travels for work or they never need to use their car for work or no, they're always office bound. So there's no working from home expenses. That sort of thing is absolutely going to undo a taxpayer who's making a false claim.
Rob Thomson
Yeah, Robyn, so what we'd say is the ATO has a number of ways that we can always verify information. And so this is about people making sure that, you know, they only claim what they're entitled to and, you know, and they have the appropriate records to back those up.
Robyn Jacobson
I often find people are astounded and don't believe that the ATO has the powers that it does. So, for example, the ATO can access e-tag information, looking at metadata on mobile phone usage, passport records. And I heard of a taxpayer years ago who ostensibly was using their car for work purposes and there were toll records to prove it and a logbook, et cetera, except that their passport showed that they were out of the country at the time they were allegedly driving around the relevant city for work purposes. So clearly someone was driving the car but it wasn't the taxpayer.
Rob Thomson
It's a good story Robyn, you know, around like we do have a range of data sources and investigative techniques we can use. For the majority of people though, they do want to get it right. And so that's why, you know, we're saying have a look at the occupational specific guidelines, have a look at the tax time toolkit. It'll help you to get it right. Then you don't have to worry about lodging any tax returns for another year. You don't have to worry about the tax office.
Robyn Jacobson
And you don't have to worry about getting your lies, all the ducks lined up in a row because everything would be correct in the first place.
Rob Thomson
That's right, Robyn.
Robyn Jacobson
Now, there've been some, what I regard as pretty significant changes and improvements to the ATO app. And I was actually involved in some of the testing of this along the way. So it's really pleasing to see this now being rolled out publicly. What are the enhancements and why is it so important that these changes are being made to the ATO app?
Rob Thomson
So the ATO app continues to be a secure and quick and an easy way for people to manage all their tax and super on the go. Recently, we've put in some new features into the ATO app that you've talked about to help users stay safer. And that relates to real time messaging and notification. So if there's any change to their account, bank accounts, someone lodges a tax return on their behalf, they'll get a message through the app that says, hey, this change has been made. And so if you know that change has been made, you change your bank account or just lodged a tax return or your agent just lodged the tax return. Nothing for you to do. But you know, if something doesn't look right, then the person can now lock their account through the app. Now at the moment, they'll have to call us to unlock it. But we are over time over the next year, we will roll out the ability through an update for them to unlock it through the app. But for now, they can lock it and then give us a call. Tax practitioners are still able to manage their clients affairs through online services for agent, including lodging returns, et cetera, why that is locked. So it won't affect the agent, but it does stop anyone else other than the agent being able to do anything on their return. So we think this is a really important security feature to help people to keep their tax and super accounts safe. while still offering all those other tools we've talked about like the MyDeductions tool, et cetera. So ato.gov.au/app, people can go there, can download it and it's got lots of information there.
Robyn Jacobson
And importantly, it also won't allow refunds to be issued while it's locked. again, having gone through the testing, we did receive messages when things were changed. So if there was a change to your name or a bank account, there was this real time notification, which again, if you're making that change or good, but if you know you didn't make the change and you say that someone's changed your bank account with the tax office, then that's some serious fraud going on.
Rob Thomson
Yeah. And if you think about that, Robyn, if someone's trying to be fraudulent on your account, they need to get the money. So one of the things they're going to do is change your bank account. Right? So those kind of things will allow those kind of alarm bells to be rung or not rung, but like to make people aware of it. If they've changed their bank account, nothing to do. But if they haven't, they can lock their account and then they can give us a call.
Robyn Jacobson
Yep, it's really pleasing to see this. Aside from work related expenses and working from home, the ATO this year is talking about what it describes as multiple income sources. What does this mean and what's the tax risk associated with it?
Rob Thomson
Yeah. So it's important that people declare all sources of income on their tax returns. So this includes from all your jobs. So, you know, part-time, full-time, odd jobs, casual, self-employment, foreign income. And if you've picked up some extra work through like side hustles, Robyn, so, you know, ride sharing app, for example, if you're using that on the weekend or something else, then including that, but also interest from investments, cash jobs, all of those foreign income and they all need to go in your tax return. So just reminding people they do need to include all those. Now, if you are receiving income from more than one job at the time, just reminding people they should only claim the tax free threshold on one job. What we see is a common mistake is people try and claim that on more than one job or more than one employer, or they've claimed it with one and then they've started a second job and they've also claimed it there. Now, what that can do is if you get to the end of the year, and your income is more than $18,200, it can actually mean that you haven't had enough income tax withheld by those employers or admitted to the ATO during the year. And you can actually receive a bill at the end of the year. So just to remind other people, only claim it on one job. And then that way you avoid potentially getting a bill at the end of the year.
Robyn Jacobson
What can also be an issue for contractors or gig economy or whatever you want to term those workers is they might get into unfamiliar tax environments. So because they're no longer employed, if they're working solely for themselves, there's no longer PAYG withholding, but instead they become responsible for PAYG instalments. Problem is that these don't kick in until after you've lodged your first tax return running the business, which means you're in your second year of operation and depending when you lodge, you could be very much into that second income year before the ATO says, right, welcome to the PAYG installment system. You've now got to start paying quarterly installments around the time that the tax for year number one is also due. So there can be a real cash flow crunch around this time. So it's important that they understand the timing of when taxes got to fall due, particularly in those first couple of years. Debt is often a problem here. So people can quickly fall into tax debt and they're only just kicking off their business. So it's really got to be managed properly. And remembering also that if you're working for yourself as a sole trader, there's no superannuation guarantee support. So you can, of course, pay your own super and claim it as a tax deduction. But it's a lot to be responsible for when you've always had that benefit of being provided by your employer in this regard.
Rob Thomson
That's right, Robyn. So, you know, if you are moving out of your employer employee relationship into to some of these, then you do need to be aware that those tax consequences have changed. And to your point, say making sure you understand those from the start is a good idea. Having a look at the ATO website or speaking to a registered tax professional if you're not sure what they are.
Robyn Jacobson
So, Rob, onto investments. What are some of your key messages for rental property owners?
Rob Thomson
So two specific areas we're just asking those that have rental property investments to pay specific attention to are with respect to repairs and maintenance, and then also apportionment when it comes to claiming their finance costs. So on repairs and maintenance, one of the things or common mistakes we do see is with respect to initial repairs. And so that's when someone buys an investment property and makes repairs to that property to make it tenable. Now, whether they make those before the tenants move in or they make them later because they were there when they bought their property, they're not considered to be repairs and maintenance and immediately deductible. They're considered to be capital works and they need to be depreciated at 2.5 % a year, over 40 years. Now, keeping good records with those is also good because at the end, if you haven't fully depreciated that, that can also go into your cost base when you go to sell the property for capital gains.
Robyn Jacobson
And Rob, that would be because when you've got the initial repair, it's capital because it's considered to have been reflected in the purchase price. In other words, you paid a little bit less for it because of the state of the property.
Rob Thomson
That's right, Robyn. And so, you know, that's different to repairs and maintenance that you might make three or four years in where your tenants have moved out. You see some crack tiles and you need to replace a few crack tiles in the bathroom. records are really important. Investor toolkit on the ATO website has lots of information about the difference between repairs, initial repairs, and then decline in value for depreciating assets. The other one is finance costs. So this is where typically we see people are taking out a finance facility for their property, but they might also use some of that money for private expenses, as a school fees or holiday, you know, buying a new car, or they might refinance and take some money out for that. So just a reminder to people, if they are doing that, they'd need to apportion the interest expense between the private purpose. and the amount that's being used to generate the investment property income. And the needs to that for the life of the loan. So just reminding tax professionals here to just ask their clients if there's been any changes to their financing facility during the year, but also for taxpayers to have a chat to their tax agent if they are lodging through a tax agent at tax time and let them know if there's been any changes to their financing arrangement.
Robyn Jacobson
So, turning back to tax practitioners, of course, they've got the lodgement programme in place designed to spread the load over, let's call it 11 months of the year. But there are times when agents themselves can run into challenges in meeting the client's lodgement obligations. So what sort of support is available to agents where there might be unforeseen circumstances?
Rob Thomson
So Robyn, where there's been unforeseen circumstances in the practice and tax agents are feeling under pressure or overwhelmed, then they can talk to the ATO about the Supported Lodgement Program. So seeking deferrals or assistance via our Supported Lodgement Program isn't a problem if the reasons for unforeseen or unexpected circumstances such as a natural disaster. And that program will help to get the tax agent back on track with their lodgement and back to where they need to be. With respect to deferrals more generally, we have seen an increasing rise in deferral usage, and this is not a trend we want to continue to see. And we're looking at how we can improve lodgement performance across the profession but also reminding people or reminding tax agents about the details they need to include if they are applying for a deferral. We have seen some copying and pasting of the same reason from one to another, by tax agents and so if you are applying for deferrals, do have a look at the ATO website and make sure that you know that you are justifying those correctly.
Robyn Jacobson
I understand what you're saying and deferrals is a time and a place for them. But also, I think we've been able to acknowledge the incredible pressure that the profession's been under for many years now. During the pandemic, there was incredible workloads, as we all know. And to be frank, some of them are still recovering from that. There’s been labour shortages across the profession. It's harder and harder to get young staff to come and want to do tax returns. And so there may not be ill health or a natural disaster, but they may just be struggling with the workload. Can they still talk to the ATO in that situation?
Rob Thomson
They can talk to the ATO. You can go to the ATO website and there's a page for tax practitioners and the support options we have. So if they are having issues, they do need to speak to someone, then please have a look at the ATO website.
Robyn Jacobson
Okay. Cost of living. It doesn't matter who you are. Everyone is feeling it. What support is available from the tax office for those who are struggling financially?
Rob Thomson
So, Robyn, we do continue to encourage people to obviously pay on time and pay the full tax bill on time and to prevent interest and to prevent firmer action where that's appropriate. If your clients are finding it hard to pay a lodge on time, they should make sure that they're contacting you well before the due date for the payments due. And we can work with the tax professionals to find a solution. Now with respect to payment plans, obviously tax agents can do the payment plans through online services for agents for debts less than $200,000. And your clients can also do this through online services. If your taxpayers are experiencing genuine hardship, then there are additional options available like interest remission and varying payment due dates. But you'll need to get in contact with the ATO about those.
Robyn Jacobson
Rob, right at the start you mentioned the work you've been doing extensively for vulnerable taxpayers and the vulnerability framework. Would you please just comment on that briefly? What does that mean and what does it look like for taxpayers who are vulnerable?
Rob Thomson
Our vulnerability framework that we're currently at have out for consultation is really the high level principles about how the ATO will support people experiencing vulnerability within the context of the commissioners bound by the law. so within the context of the existing legal framework. And so there are principles that are designed that then can be applied across the office in a way that allows us to think about our resources and how we better support people experiencing vulnerability. Now it is out for draft at the moment and we are looking forward to all the feedback we're getting. And then we will look to implement that framework over time. You know, it is in the signaling our intent and our commitment around where we want to get to. It doesn't mean we're there on everything yet, but it is where we want to get to as an organisation. And so people can type in ATO vulnerability consultation and they'll find the website.
Robyn Jacobson
It's commendable work. Now, change from 1 July 2025, the general interest charge and also the shortfall interest charge, I'll just call them interest charges, are now non-deductible. So this is what is charged by the ATO when you owe a tax debt, like any interest is charged on a loan, although the rates for the GIC are just a little bit higher than your average commercial interest rates. Can you offer any advice to our audience on the changes that now make GIC non-deductible?
Rob Thomson
When general interest charges incurred on or after 1 July 2025 are no longer deductible, irrespective of whether that interest charge relates to an earlier income year or not. Income charges are accrued or incurred before then, so for last financial year are still deductible. So for those lodging their 24-25 income tax return, a reminder there. But this does mean it's going to be more important for clients to keep on top of their obligations as they'll pay more overall to carry an unpaid tax debt. So we just encourage tax professionals to talk to their clients who have a tax debt about trying to pay this as soon as possible to reduce the overall amount of interest they need to pay. As we talked about just before, if your client is experiencing difficult circumstances, there are support options available to them.
Robyn Jacobson
It's also important to note the ATO's power of remission to remit the GIC hasn't changed, but certainly we're receiving tax practitioner feedback that indicates that the ATO is taking a firmer action that's much harder to get remission these days. I also want to note for everyone that if indeed the GIC is deductible under the law or you could have claimed a deduction for it, if that charge is later remitted by the ATO, then because you claimed a deduction, the remitted amount is accessible. But moving forward with non-deductibility of GIC, if such an amount is then remitted, then it would not be accessible because you haven't claimed a deduction. So if you like, there is a symmetry, but it will make it challenging to look at the actual time that the GIC was incurred to know whether or not any remission might subsequently be accessible. Now, let's talk about cybersecurity and fraud. We've only got a few minutes left and it's so important to address this. I won't say just emerging area because it's been emerging for many years, but it's getting more intense. It's getting more serious. And the ramifications of having a security breach are more significant than ever before. So what can taxpayers do to protect themselves online when they're dealing with the ATO?
Rob Thomson
Yeah, Robyn. So we recommend that the taxpayers use myID for a more secure and flexible way to access the ATO online services in the ATO app. And they should set their myID strengths to the highest that they can achieve and then access our online services, achieving either using a standard or a strong identity strength. Now the difference between these two identity strengths is that to achieve a strong, they'll need to complete a face verification check. This is a one off process. It's kind of like taking a selfie. I've done a selfie. I've to put it in the right spot. That you're a real person and the right person and that gets verified in real time. And it compares to an image on their ID. And right now to achieve strong, that'll need to verify a passport that's current or in the last three years. However, if you don't have an eligible passport, we still encourage people instead to set up a standard yID.
Robyn Jacobson
And it's very straightforward to set up. Now, assuming you've got the right documents, and there will be some people who unfortunately don't. And so that would mean that they're either at a standard myID or if they don't even have those, they might have been struggling to set up their myID.
Rob Thomson
Yeah. So, I think we're just encouraging people to try and whatever they can get to, to try and set it up as strong as they can.
Robyn Jacobson
Yep. What's the benefit of using myID?
Rob Thomson
So it's more secure than our other signing options because users have to verify their ID in the app. So it makes it harder for fraudsters to impersonate you. Once you've set it up, then any future access for your services, ATO online services occurs at that higher level. And so fraudsters can't then use your myGov ID signing options to access it at a lower level. So it makes it stronger and it's more flexible in terms of how you sign in. So it isn't locked to your specific mobile phone. like when you get an SMS or, you, you know, the, myGov generator app, and it can also be used overseas. So a little bit more flexible, ⁓ a little, it locks it in a little bit more, makes it harder for fraudsters to impersonate you. Now for tax agents using my ID and relationship authorization manager together, ⁓ can ensure the right people have the right access to the right services on behalf of your practice as well. So also important for tax agents.
Robyn Jacobson
So to recap that, it's really important that once you've set up your strong ID, you want to use your digital ID to log into myGov. Now, these are lots of concepts. myGov is the platform, the website, if you like, through which you access government services. And there is a myGov app as well. But what you want to do is once you set up your my ID, which is your digital identifier, and that proves that you are who you say you are, make sure you select digital ID to sign into myGov, not your username and password because once you've used your digital ID to sign in, as Rob said, you've got no ability for someone to use a lesser strength ID to log in. And then once you're into myGov, then you can link the ATO online services to your account. All right. How does someone know it is the ATO talking when you get a message? And I want to say, Rob, I've had a whole bunch of emails turn up in my junk email, allegedly from myGov or from the ATO telling me about my refund, which I'm yet to lodge my tax return, so it can't be my refund yet. How do we know it's really the ATO? And I've been, by the way, looking at the URL or the email address and it does look dodgy.
Rob Thomson
Yeah, Robyn, look, I've got heaps in my email as well at this time of the year. know, scammers work 365 days a year, fraudsters work 365 days a year, but they know at tax time people are expecting to engage with the tax office. And so they try to be more opportunistic. So what we say is if you get a message from the ATO, stop, check and protect. So stop. Never share your myGov details with anyone. Only share your personal information with people you generally that you trust and genuinely require it. If you're doubt, just don't disclose anything. Take a second to check. Just ask yourself, could this be fake? If you think it's not the ATO, then don't provide any information and protect. So act quickly. If you have given up information or something doesn't feel right, give us a call on 180-0008-540.
Robyn Jacobson
So that number again, 180-000-8540.
Rob Thomson
Yeah. And now some really easy ways you can tell that you're probably not talking to the ATO. It's not a message from the ATO. So we're never going to send you unsolicited text messages or emails asking you to provide your tax file number, your bank account details, your passwords. Our emails don't include QR codes or hyperlinks. We are on Facebook and Insta, but we're not going to contact you over Facebook and Instagram. We're not going to slide into your direct messages and ask you anything and probably another one is whenever you're to threaten you with immediate arrest or demand is stay on the line until payment is made. Scammers use this tactic to try and get people agitated and give up their staff. So there's some ways you can tell. Look, always just access any correspondence by typing my.gov.au into your browser or using the official myGov app. And that's just ways that you can kind of keep yourself a little bit more safe.
Robyn Jacobson
All those times I've been threatened with arrest or there's a warrant out, I should disregard those.
Rob Thomson
Yeah, yeah, you can, can, Robyn. You know, I do have someone even call me and tell me that they're from the ATO and they were going to arrest me. And the moment I told them I worked for the ATO, they hung up quite quickly. You know, it's just a good reminder.
Robyn Jacobson
Yeah, very good. All right, some final words as we wrap up. What would you like to say?
Rob Thomson
Yeah, so probably three quick things, Robyn. One is, you know, as we talked about, wait for prefill for your tax return. Wait to lodge at the end of July. We'll have prefilled a lot of information into help you to avoid any, make any mistakes. Stick to the three golden rules. If you're claiming a work-related deduction, being that you spent the money yourself, it directly relates to your income you're earning and you've got a record normally in the form of receipt. And the third is download the ATO app. It's fast and secure as we've talked about, but it's also an easy way to manage your tax affairs, whether you're lodging yourself or you're lodging through a registered tax agent.
Robyn Jacobson
Rob, thank you so much. There's so much valuable content, information, guidance and advice. I really appreciate your time because I know you are on the circuit. You're speaking to so many people at the moment. So we're very grateful that you could come and chat with us.
Rob Thomson
Thanks, Robyn. Thanks for having me. It's been great.
Robyn Jacobson
Thank you, Rob. Thanks for listening to this episode of TaxVibe. I’ve been chatting with Rob Thomson, Assistant Commissioner at the ATO. If you enjoyed this episode, we’d love for you to subscribe, rate and review TaxVibe wherever you listen. We welcome any feedback and suggestions. To catch all the latest from TaxVibe and The Tax Institute, join us on LinkedIn. If you’re interested in being at the centre of the tax conversation, a membership with The Tax Institute could be just what you need. Stay current and connected, with tangible, real-world benefits. Learn more at taxinstitute.com.au. Thanks again! ’Til next time on TaxVibe.
