What the ATO Is Focusing On – And How to Prepare for Tax Time

As the end of the financial year approaches, now is the time to get your investment records in order and understand where you may have potential tax liabilities.

The Australian Taxation Office (ATO) is once again leveraging its advanced data-matching technology to ensure all income—including from investments—is properly declared.

Key ATO Focus Areas

The ATO will continue targeting inflated rental property deductions and tracking capital gains from the sale of exchange traded funds (ETFs), managed funds, shares, bonds, property, cryptocurrencies, commodities, and other assets. These efforts extend to overseas transactions, aided by the ATO’s global data-sharing capabilities.

To improve compliance, the ATO is working to pre-fill more data in tax returns and advises taxpayers not to lodge until they have complete records of all income, including interest, dividends, and government payments. This may require waiting until investment providers issue annual tax statements.

1. Identify All Your Investments

Maintaining an accurate inventory of all your asset holdings is essential for preparing your tax return. This can be challenging if your investments span multiple platforms or asset classes. Take time now to conduct a thorough audit of your portfolio and consult your financial adviser if adjustments are needed before 30 June.

2. Calculate Your Tax Liabilities

Capital gains tax (CGT) applies to profits from sold investments and is calculated based on your marginal tax rate. Net capital gains account for the acquisition cost and related expenses.

Other taxable investment income includes:

ETF and managed fund distributions
Share dividends
Bond interest
Savings and term deposit interest
Rental income

Ensure all distributions and earnings are recorded and ready for inclusion in your tax return.

3. Consider Tax Loss Harvesting

You may reduce CGT by selling loss-making assets before 30 June. Losses can offset capital gains, and may also release funds for other investments. However, be cautious of "wash sales"—where you repurchase the same or similar asset shortly after selling it to claim a loss—as the ATO scrutinizes these transactions and may deny the tax benefits.

Seek professional advice before making any such moves to avoid unintended consequences.

4. Track Allowable Deductions

You may be eligible to deduct expenses incurred in earning investment income, such as:

Interest on loans used to purchase investments
Investment account and management fees
Costs associated with tracking investments (e.g., internet, computer depreciation)
Seminars and educational materials
Select travel and subscription expenses

For rental properties, the ATO is particularly focused on incorrect claims. Immediate deductions are allowed for repairs and maintenance, but not for capital improvements. Loan interest must be accurately apportioned if used partly for private purposes.

Final Tips

With limited time before 30 June, make sure you:

Understand your total investment income
Review your portfolio for potential tax liabilities
Maximize eligible deductions

If unsure, consult a tax specialist or financial advisor to ensure your strategy aligns with ATO expectations.

Rick Maggi CFP, Financial Advisor Perth, Westmount Financial