As Tax Time 2018 has ‘kicked off’, the ATO has profiled the five most common mistakes and the personalities most likely to have tax time troubles.
The top five mistakes include taxpayers who are:
- leaving out some of their income (e.g., forgetting a temp or cash job, capital gains on cryptocurrency, or money earned from the sharing economy);
- claiming deductions for personal expenses (e.g., home to work travel, normal clothes or personal phone calls);
- forgetting to keep receipts or records of their expenses (around half of the adjustments the ATO makes are because the taxpayer had no records, or they were poor quality);
- claiming for something they never paid for – often because they think everyone is entitled to a ‘standard deduction’; and
- claiming personal expenses for rental properties – either claiming deductions for times when they are using their property themselves, or claiming interest on loans used to buy personal assets like a car or a boat.
Assistant Commissioner Kath Anderson reiterated the three ‘golden rules’ for workrelated expenses: “You must have spent the money yourself and not have been reimbursed,it must be directly related to earning yourincome, and you must have a record to prove it.”
For those intending to push the boundaries, or perhaps fudge some parts of their return, the ATO has them in its sights. Stating they are increasing their investement in education and assistance, as well as reviews and audits. This year they are expecting to make contact with more an 1 million taxpayers either directly or through their agents.
“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.” Kath Anderson.
Reference is ATO Media Release here.
This update is from National Tax & Accountants’ Association, shared by us to help you stay in the loop of accounting and tax updates for you and your business.