As ‘tax time’ approaches, the Australian Taxation Office (ATO) has announced it will be taking a close look at three common errors being made my taxpayers:
- Incorrectly claiming work-related expenses
- Inflating claims for rental properties
- Family to include all income when lodging
Work Related Expenses
Last year, the ATO revised the fixed rate method of calculating a working from home deduction to broaden what is included, increase the rate, and adjust the records you need to keep.
These changes are now in full effect this financial year, meaning you must have comprehensive records to substantiate your claims as you would for any other deduction.
Remember, there are three golden rules for claiming a deduction for any work-related expense:
- you must have spent the money yourself and weren’t reimbursed,
- the expense must directly relate to earning your income, and
- you must have a record (usually a receipt) to prove it.
Rental Properties
Rental properties continue to remain in the ATO’s sights. The ATO data shows 9 out of 10 rental property owners are getting their income tax returns wrong.
This year, The ATO are particularly focused on claims that may have been inflated to offset increases in rental income to get a greater tax benefit.
As reporting rental income and deductions can be complex, many individual rental owners choose to use a registered tax agent to help them prepare their income tax returns. Ensuring you provide full and complete records to us allows you to prepare your tax return correctly, so you claim everything you’re entitled to.
Get it right – wait to lodge
The ATO is also warning against rushing to lodge your tax return on 1 July.
If you have received income from multiple sources, you need to wait until this is pre-filled in your tax return before lodging.
By lodging in early July, you are doubling your chances of having your tax return flagged as incorrect by the ATO.
You can check if your employer has marked your income statement as ‘tax ready’ as well as if your pre-fill is available in myTax before you lodge. That way, an amendment doesn’t need to be made later, which could result in unnecessary delays.
