Avoid these common tax return mistakes
22 July 2019
The Australian Taxation Office (ATO) has released a list of the most common tax return mistakes people have made.
Mistake #1: Lodging before your prefill data is available or failing to report all income
Being the first cab off the rank at tax time may inadvertently slow down your tax return.
Assistant Commission Karen Foat said “…we know from previous years that the early birds who lodge in the first weeks of July are far more likely to make mistakes or submit incomplete data. These mistakes may slow down your return, or result in a debt owing to the ATO if we later need to correct the information.”
So if you’re planning to lodge early, make sure you’re vigilant about supplying all necessary information accurately.
Alternatively, you can wait until all of your prefill data is available to avoid accidental errors.
Failing to report all income can be another costly error.
The ATO has sophisticated data matching systems so don’t be tempted to think that you can fly under the radar with your side hustle.
According to Ms Foat, the ATO “…will be analysing over 650 million pieces of data from banks and financial institutions, employers, the sharing economy, rental property managers, cryptocurrency exchanges and share registries.”
Mistake #2: Claiming the wrong thing
The ATO has three “golden rules” when it comes to work related expenses:
1. you have to have spent the money yourself and not been reimbursed
2. the claim must be directly related to earning your income
3. you must have a record to prove it
You must also ensure that any amount you claim as a work related expense does not include costs incurred for personal use.
The ATO has created 30 occupation specific guides to help you work out what you may be able to claim: ato.gov.au/occupations
You can also use our tax return checklist to see what you may or may not be able to claim: https://shakes.com.au/accounting-tax/2019-tax-return-income-deductions-checklist
Mistake #3: Forgetting to keep receipts
Receipts are essential for validating claims. Even when the claim falls below the threshold for requiring a receipt, you will still need to provide evidence of the expense if the ATO requests it.
So make sure you keep them in a safe and easily accessible place.
The ATO’s myDeductions app may be useful to store your receipts if you prefer a digital storage method.
Mistake #4: Claiming for something you never paid for
To make an eligible claim, no matter how big or small, you must have actually incurred the cost yourself.
This includes claims that fall below the record keeping limit. You still need to show the ATO that you incurred the expense if queried.
Ms Foat is reminding people that “Exceptions to the record keeping rules are there to make things simpler – they do not allow you to claim an automatic deduction up to the specified amount where the money has not been spent. No-one is entitled to a ‘standard deduction’.”
Ms Foat went on to say “A little bit of over claiming across a lot of people adds up to billions of dollars. No matter how small, claiming deductions you are not entitled to means essential community services miss out”.
Want to know more?
Contact the team at Shakespeare on 08 9321 2111 if you’d like to discuss how the above may apply to your individual circumstances.
Our firm provides the information on this website for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.
Tax articles on this website are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose .