COMMON TAX MISTAKES INDIVIDUAL TAXPAYERS CAN AVOID
Another financial year has been and gone, which means taxpayers are now concentrating on getting their returns prepared and lodged. The ATO announced a week ago that there will be a widespread crackdown on millions of Australian taxpayers after a ‘tax gap’ of over $8.7 billion was uncovered. This gap for the most part is pinpointing common mistakes made by individual taxpayers incorrectly claiming various deductions.
The ATO has provided a guide to the 5 most common tax mistakes which are briefly listed below:
- Forgetting some of their income – maybe forgetting a part time job (i.e. temp job) or money earned elsewhere
- Claiming deductions for personal expenses – personal phone calls, home to work travel, normal clothing are just some of the examples listed by the ATO
- Receipt keeping – keeping receipts and/or records is paramount to ensuring that your deductions are legitimate and correct
- Claiming personal expenses for rental properties – claiming interest on loans used for personal purchases or claiming deductions on the property when it was being used for personal circumstances
- Claiming for something they never paid for – this is a common one, often because they think everyone is entitled to a ‘standard deduction’
All individual taxpayers should keep to the 3 golden rules for claiming deductions → you must have spent the money and not be reimbursed for the transactions → the deduction must have direct correlation to your income → and always keep a record of it!
The ATO will be closely looking at claiming of private expenses such as, home to work travel, private phone calls and normal/plain clothes. Plus, as the ATO has more capability to data match, they will also be targeting missed income, such as gains on cryptocurrency, cash jobs, temp jobs etc.
Tax returns are not tricky or hard, keeping good records and receipts is the key. The ATO have a great record keeping tool within the ATO app. All you do is just take a photo, record a few details about the receipt/tax invoice and then at the end of the year this can be uploaded to your tax agent or to my myTax.
More than ever, it is very important to gather your receipts and discuss your record keeping and taxation affairs with your PJT Business Advisor as part of your annual appointment. To book an appointment please contact our office on 07 5413 9300 or firstname.lastname@example.org for anything tax related.