ATO app changes from 1 July to simplify sole trader expense recording

Changes to the Australian Taxation Office (ATO) myDeductions app from 1 July 2017 aim to simplify tax returns for sole traders.

From 1 July 2017 you can upload your records to the ATO to pre-fill your tax return or email your tax agent a copy of your detailed records.

Sole traders with simple tax affairs can use myDeductions app to record income and expenses. In this instance, 'simple tax affairs' means you don't have:

  • a primary production business

  • personal services income and associated expenses.

Sole traders can record the following deduction types:

  1. repairs and maintenance

  2. motor vehicle expenses

  3. all other expenses.

Record keeping Providing you keep electronic copies of your paper receipts that are a true and clear reproduction of the original, you're not required to also keep the original paper receipts.

Electronic copies of your receipts must show the:

  • name or business name of the supplier

  • amount of the expense, expressed in the currency in which it was incurred

  • nature of the goods or services

  • day the expense was incurred

  • day it is made out.

Because it's your responsibility to ensure you keep eligible records, the ATO recommends that you regularly back up your records and keep a copy of your evidence (the photos) so you can substantiate your claims if asked to in the future.

Recording income in myDeductions

You should only record income in myDeductions if you’re a sole trader with simple tax affairs – that is, you do not have primary production business or personal services income. Only your business income should be recorded.

Any other income you've earned must be entered directly into your tax return, including:

  • income earned as an employee,

  • income from which tax has been withheld because you did not quote your ABN to one of your payers

  • gross payments subject to foreign resident withholding

  • income that was subject to a PAYG voluntary agreement to withhold tax

  • income received under a labour-hire arrangement or from other specified payments

  • assessable government industry payments.

If you upload any other types of income apart from business income, the information will be pre-filled into the wrong sections of your tax return.

Videos explaining how to use the myDeductions app can be viewed here.


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