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.
Also read: Boost your tax return: 8 last-minute tips
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.
“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
The ATO said some common mistakes it saw in regard to claims for work-related expenses included:
Claiming an immediate deduction for the cost of tools and equipment that were purchased for more than $300
Claims for travel between home and work
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.
No matter the occupation, to claim a deduction for a work-related expense, three golden rules must apply:
You have spent the money yourself and weren’t reimbursed
It directly relates to earning your income and it isn’t private in nature, and
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 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