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ATO reveals the most common tax-time mistakes

Here’s what to watch out for when you lodge your tax return.

A composite image of the ATO logo on the exterior of a building and tax deduction forms.
The ATO has revealed the most common mistakes Aussies make when lodging their tax return. (Source: AAP / Getty)

It’s tax time, and while Aussies are preparing to lodge their tax returns, the Australian Taxation Office (ATO) has revealed the most common mistakes people make.

The ATO told Yahoo Finance its focus areas this year were rental property deductions, work-related expenses and capital gains tax, and it said it regularly saw the same mistakes occurring in those areas.

Here’s what you need to be double-checking before lodging your return.

Waiting for pre-fill

“We see lots of people making mistakes when they rush to lodge in early July, which can also delay their return from being processed,” an ATO spokesperson said.

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“If you wait just a few weeks, most of the information from employers, banks, private health insurance, and government agencies is automatically pre-filled into your tax return.

“Lodging at the end of July will also give you time to find those receipts for work-related expenses you have incurred since July 1 last year to maximise your tax deductions.”

Rental property deductions

For rental property deductions, some examples of common mistakes included:

  • Not apportioning interest expenses correctly when you borrow money or redraw on your loan for anything other than the investment property, when only part of the property was available for rent or when it was only available for part of the year

  • Claiming immediately for costs incurred to remedy defects, damage or deterioration that existed at the time someone acquired the property – these are considered to be capital in nature and must be claimed over a number of years

  • Not declaring, or under-declaring, rental income - It is important to include rental income received from all sources, including where a property is rented through platforms such as Airbnb or Stayz

Work-related expenses

The ATO said some common mistakes it saw in regard to claims for work-related expenses included:

  1. Claiming an immediate deduction for the cost of tools and equipment that were purchased for more than $300

  2. Claims for travel between home and work

  3. Double-dipping on deductions – taxpayers using the cents-per-kilometre method to claim car expenses then claiming expenses separately such as fuel, car insurance, repairs, and registration

For work-related expenses, what you can claim really depends on the job you have, the ATO spokesperson said.

“We have developed a number of occupation and industry-specific guides to help you work out what you can and can’t claim,” they said.

No matter the occupation, to claim a deduction for a work-related expense, three golden rules must apply:

  1. You have spent the money yourself and weren’t reimbursed

  2. It directly relates to earning your income and it isn’t private in nature, and

  3. You must have a record to prove it, receipts are best

Capital gains tax

When it comes to capital gains tax (CGT), a lot of mistakes come down to not keeping records on the purchase and sale of the asset, capital improvements and brokerage fees, the ATO said.

Other mistakes with regards to CGT include:

  • Not reporting a capital gain, loss or the main residence exemption in your tax return when a rental property is sold. Information on eligibility for main residence exemption can be found here: Eligibility for main residence exemption | Australian Taxation Office (ato.gov.au)

  • Not including capital gains or losses from the disposal of crypto assets, this includes when crypto assets are sold back into fiat currency, swapped, transferred, or gifted

  • Forgetting to include all investment income, including staking rewards, airdrops or yield farming associated with crypto assets

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