Assistant commissioner at the Australian Taxation Office (ATO) Kath Anderson said it’s often simple mistakes that trip taxpayers up.
“While we know most people want to get it right, our audits and reviews show that there are five main areas where taxpayers are most likely to get it wrong,” she said.
1. Leaving out some of their income
“A temp job, cash jobs, capital gains on cryptocurrency, or money earned from the sharing economy is all income that must be declared. We are constantly improving our data matching tools and even a one-off payment may be enough to raise a red flag,” Ms Anderson said.
“We know some people lodge early because they want their refund, and that’s fair enough. But we amend returns for thousands of taxpayers that leave out some of their income. This can delay your refund or even see you owing money to the ATO. If you wait until mid-August, we will have pre-filled most of your income information for you, to help you get it right to start with.”
2. Claiming deductions for personal expenses
These include home to work travel, normal clothes and personal phone calls. Ms Anderson said the golden rules for work-related expenses are that the money needs to be spent by the individual and not reimbursed, it must be directly related to the job and there must be records.
“We will also be paying attention to people who are claiming standard deductions for expenses they never paid for,” she said.
3. Forgetting to keep receipts
The assistant commissioner said about half of all adjustments made are because the taxpayer kept poor quality or no records of their expenditures.
“Yet it’s so easy to keep your records, using the myDeductions tool in the ATO app. Just take a photo, record a few details and then at the end of the year upload the information to your agent or to myTax,” Ms Anderson said.
4. Claiming for something they never paid for
The ATO said this is often the result of a misconception that everyone is entitled to a “standard deduction”.
“Know what you can legitimately claim,” was Ms Anderson’s advice. “We are increasing our investment in education and assistance, as well as reviews and audits. This year we are expecting to make contact with more than 1 million taxpayers either directly or through their agents.”
5. Claiming personal expenses for rental properties
Claiming deductions for periods when the taxpayer was using the property isn’t on, and neither is claiming interest on loans used to purchase personal items like a car, the ATO said.
“We know people sometimes make mistakes or forget to include something on their return. If you’re in that situation, try to fix it as soon as you can to minimise any interest and penalties. Either contact your agent or lodge an amendment online,” Ms Anderson said.
“Remember: whether you use a tax agent or lodge it yourself, you are responsible for the claims you make. Take the time to check your deductions are legitimate and you have listed all your income before lodging.”