22 July 2019
The Australian Taxation Office (ATO) has released a list of the most common tax return mistakes people have made.
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.”
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
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.
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”.
Contact the team at Shakespeare on 08 9321 2111 if you’d like to discuss how the above may apply to your individual circumstances.
Source: Australian Taxation Office “How to nail your tax return” July 2019
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