ATO's Tax Time 2026 Focus Areas: What CPA Australia and the ATO Want You to Know

Note: This article is based on the CPA Australia podcast episode "ATO's main tax time focus areas for 2026", featuring an interview with ATO Assistant Commissioner Anita Challen, hosted by CPA Australia's tax lead Jenny Wong. The original podcast and full transcript are available on the CPA Australia website. We have summarised the key insights here with our own commentary and practical advice for taxpayers.

Introduction: Tax Time 2026 Is Underway

Tax time 2026 has arrived, and the Australian Taxation Office (ATO) has made it clear that this year will see increased scrutiny across several key areas. In a recent podcast interview with CPA Australia, ATO Assistant Commissioner Anita Challen outlined exactly what the ATO is watching — and what taxpayers and their agents need to do to get it right from the start.

The message is straightforward: get your records right, claim only what you are entitled to, and be wary of misinformation. The ATO is using sophisticated data-matching technology, cross-referencing information from banks, employers, crypto exchanges, sharing economy platforms, and state land title offices. If you underreport income or overclaim deductions, the ATO will likely notice.

In this article, we break down the ATO's focus areas for 2026, explain what each means for your tax return, and provide practical guidance on how to stay compliant while maximising legitimate deductions.

1. Misinformation and AI-Generated Tax Advice

One of the most significant themes from the CPA Australia podcast is the ATO's concern about misinformation and AI-generated tax advice. Social media platforms, online forums, and generative AI tools like ChatGPT are increasingly being used as sources of tax guidance — and much of it is wrong.

The ATO has observed a growing trend of taxpayers following incorrect advice found online, leading to unnecessary audits, penalties, and interest charges. AI tools may confidently provide outdated, inapplicable, or outright incorrect information because they are not trained on the ATO's current rulings and legislation.

What you should do:

• Always verify tax advice with a registered tax agent or directly on the ATO website
• Be cautious of social media "tax hacks" and viral posts claiming guaranteed deductions
• Understand that AI-generated content is not a substitute for professional advice tailored to your specific circumstances
• Trust your accountant — they are bound by professional standards and are personally liable for the advice they give

At Elite Accounting Solutions, we have seen clients who followed online advice and claimed deductions they were not entitled to, only to face ATO reviews and penalty interest. The cost of fixing a mistake is always higher than getting it right the first time.

2. Rental Property Deductions

Rental property deductions remain one of the ATO's top focus areas for 2026. The ATO has extensive data-matching agreements with state land title offices, real estate platforms, and financial institutions, giving them a clear picture of rental income and claimed deductions.

Common errors the ATO is targeting:

• Claiming deductions for periods of personal use — if you use your holiday home for private holidays, those days are not deductible
• Interest deductions — claiming interest on the entire loan balance when part of the loan was used for private purposes (e.g., a redraw for a car or holiday)
• Repairs vs capital improvements — immediate repairs are deductible, but renovations and improvements must be depreciated over time
• Overclaiming expenses — apportionment of expenses when only part of a property is rented, or when a property is genuinely available for rent only part of the year

The ATO has also reminded taxpayers that the new Taxation Ruling TR 2026/1 on holiday home deductions applies from 1 July 2026. This ruling restricts deductions for properties that are primarily used as "leisure facilities" rather than genuine rental investments. If your holiday home is not genuinely available for rent during peak periods, you may lose your deductions entirely.

Read our complete guide to TR 2026/1 and holiday home deductions →

3. Work-From-Home Deductions

Work-from-home deductions continue to attract attention as remote and hybrid work arrangements have become permanent for many Australians. The ATO is reviewing claims to ensure taxpayers are only claiming what they are genuinely entitled to.

What the ATO expects:

• A dedicated workspace — you cannot claim occupancy expenses (rent, mortgage interest, rates) if you work from a shared space like a kitchen table or living room sofa
• Accurate records — you must keep a diary or timesheet showing the hours worked from home, plus receipts for all expenses claimed
• Running expenses only — the work area must be used exclusively for work purposes during the claim period
• The shortcut method (67 cents per hour) is available but requires contemporaneous records of hours worked from home

Common mistakes: Claiming home office expenses without a dedicated workspace, claiming personal mobile phone and internet usage in full, or using the shortcut method without keeping a log of hours.

If you are unsure whether your home office arrangement qualifies, speak with us before lodging. The ATO is conducting targeted reviews and will request evidence if your claim looks unusual.

4. Income Reporting — Don't Miss Anything

The ATO is reminding taxpayers that all income must be reported, regardless of whether you receive a payment summary or data-matching pre-fill. This includes:

• Gig economy income — Uber, DoorDash, Airtasker, and other platform work
• Sharing economy income — Airbnb, Stayz, Car Next Door, and similar platforms
• Crypto gains — selling, swapping, or disposing of cryptocurrency
• Side hustles and freelance work — even small amounts of income must be declared
• Interest and dividends — from bank accounts, shares, and managed funds
• Foreign income — including overseas investments, employment, and pensions

The ATO receives data directly from most Australian platforms, banks, and exchanges. If your tax return does not match the data the ATO holds, you will likely receive a letter or audit. The best approach is to report everything upfront and claim all legitimate deductions.

Important: If you have a side hustle or small business, you may also need to register for GST if your turnover exceeds $75,000 per year. This is a separate obligation from income tax and must be managed correctly.

5. Capital Gains — Crypto and Property

Capital gains tax (CGT) is another major focus for 2026. The ATO has expanded its data-matching program to include cryptocurrency exchanges, property sales, and share trading platforms.

Crypto: Every disposal of cryptocurrency is a CGT event — whether you sell it for AUD, swap it for another crypto, or use it to buy goods and services. The ATO receives transaction data from Australian exchanges and is actively matching it against tax returns.

Property: The ATO is reviewing property sales where the main residence exemption may not apply, as well as investment property sales where capital gains or losses have not been correctly calculated. The ATO is also watching for property flippers who may be running a business of property renovation rather than investing.

What you need to do:

• Keep detailed records of all crypto purchases and sales, including dates, values, and transaction fees
• Track your property cost base accurately, including purchase price, stamp duty, legal fees, and capital improvements
• Understand whether the main residence exemption applies to your property sale
• Report all capital gains and losses in your tax return, even if the gain is exempt or offset by losses

Read our complete crypto tax guide for Australian investors →

6. Tax Scams and Identity Theft

Tax scams are becoming more sophisticated and harder to detect. The ATO has reported a significant increase in scammers impersonating ATO officers, sending fake myGov messages, and demanding immediate payment.

How to spot a scam:

• The ATO never demands payment via gift cards, cryptocurrency, or direct bank transfers to personal accounts
• The ATO never threatens arrest or immediate legal action over the phone
• The ATO will never send a clickable link in an SMS or email asking for your myGov login details
• Scammers often use caller ID spoofing to make it appear the call is coming from the ATO

What to do:

• Never provide personal information or payment details to an unsolicited caller
• Verify any communication by logging into your genuine myGov account or calling the ATO on 1800 008 540
• Report suspected scams to the ATO via verify or report a scam
• Protect your myGov login with two-factor authentication and never share your credentials

If you believe you have been scammed, contact your bank immediately, report it to the ATO, and speak with us about protecting your tax affairs.

7. Trust Reporting and Compliance

The ATO has reminded tax agents that trust reporting requirements are evolving. Trustees must ensure that:

• Trustee resolutions are prepared and executed by 30 June each year for discretionary trusts
• Distribution minutes accurately reflect the beneficiaries and amounts distributed
• Trust deed provisions are current and comply with the latest ATO guidance
• Section 100A compliance is reviewed — the ATO's anti-avoidance rules for trust distributions are being actively enforced

With the 30% minimum tax on discretionary trust income commencing from 1 July 2028 (as announced in the 2026 Federal Budget), trust structures are under more scrutiny than ever. Trustees and beneficiaries should review their arrangements now and plan for the upcoming changes.

Read our complete trust distribution guide →

Read our Federal Budget 2026 analysis: trust tax changes →

8. Record Keeping — The Foundation of Every Deduction

The single most important message from the ATO this year is: keep accurate records. Without proper documentation, you cannot substantiate your deductions if the ATO asks.

Minimum record-keeping requirements:

• Keep receipts and invoices for all deductible expenses
• Log work-from-home hours with a diary or timesheet
• Document rental property income and expenses, including dates of personal use
• Keep crypto transaction records, including dates, values, and fees
• Retain bank statements, employment contracts, and payment summaries
• Store records for a minimum of five years from the date of lodgement

Digital record-keeping is acceptable. Apps like myDeductions (in the ATO app) can help track work-related expenses throughout the year. Many of our clients use cloud-based tools integrated with their accounting software to keep everything in one place.

If you have not kept proper records, you may still be able to claim some deductions using the reasonable estimate method in limited circumstances — but this is risky and should only be used with professional guidance.

9. What Tax Agents Should Know

The ATO has also provided guidance for registered tax agents. Key points from the CPA Australia podcast include:

• Pre-lodgement checks — review your client's ATO pre-fill data and compare it against their records before lodging
• Client education — help clients understand what income and deductions are relevant to their circumstances
• Trust compliance — ensure all trust documents are in order and that distribution resolutions are properly prepared
• Scam awareness — advise clients to verify any ATO communication directly and not respond to unsolicited demands
• AI tools — be cautious about using AI-generated content in client communications or tax planning, and always verify accuracy

At Elite Accounting Solutions, we conduct a thorough pre-lodgement review for every client, cross-referencing ATO pre-fill data, bank statements, and our own records. This ensures your return is accurate before it is lodged — reducing the risk of ATO review and giving you peace of mind.

10. How to Get It Right from the Start

The ATO's message is clear: get it right from the start and you will avoid headaches, penalties, and interest charges later. Here is a simple checklist for Tax Time 2026:

1. Report all income — wages, side hustles, crypto, rental, dividends, interest, and foreign income
2. Keep proper records — receipts, logs, bank statements, and supporting documents
3. Claim only genuine deductions — work-related, rental, investment, and charitable expenses you are entitled to
4. Check your pre-fill data — compare the ATO's records against your own before lodging
5. Review your trust documents — ensure resolutions are current and compliant
6. Stay scam-aware — verify any ATO communication before responding or paying
7. Seek professional advice — a registered tax agent ensures your return is accurate and optimised

Source and Further Reading

This article is based on the CPA Australia podcast episode "ATO's main tax time focus areas for 2026", which featured an in-depth interview with ATO Assistant Commissioner Anita Challen.

Original source: CPA Australia — ATO's main tax time focus areas for 2026

Additional resources:

• ATO website — official guidance, calculators, and tools
• ATO Online Services — access myGov and manage your tax affairs
• Verify or report a scam — ATO scam reporting tool
• How to stay scam safe — ATO cybersecurity guidance
• CPA Australia Tax Time Resources — additional tools and resources

Podcast team contact: You can email the CPA Australia podcast team at podcasts@cpaaustralia.com.au

ATO phone: 1800 008 540