Top five tax return mistakes (that could cost you dearly)
It’s easy to make mistakes when doing your tax return – whether it’s intentional or not. The Australian Tax Office (ATO) is currently on the warpath with taxpayers, after it emerged Australians over-claimed an estimated $8.7 billion of mostly work-related expenses in 2014-15.
Also read: Australians over-claim $8.7 billion in tax
Here are some of the most common tax return mistake that you should avoid – if you want don’t want to attract the attention of Mr Taxman, according to etax.com.au.
Guesstimating tax deductions
Use accurate figures when you enter your income, deductions, work expenses and the amount of tax you’ve actually paid when doing your return. ALWAYS wait until you receive your PAYG summary (group cert) before you think about filing a return. Even if you’re just a few dollars out, it may raise the attention of the ATO. The tax office has records of tax paid so can compare what you submit against the information they already have.
Over claiming
As we saw from yesterday’s massive over claiming figures released by the ATO, it is going to be super strict on expense claims this year – so be sure you just claim work expenses actually incurred and have receipts for everything so if you are subject to an audit, you’ll be able to back it all up. Also, be sure to declare bank interest earned, and any other income coming in from a side hustle.
Forgetting to declare overseas income
If you are an Australian resident for tax purposes, you should still lodge an annual tax return [in Australia] even if you live and work abroad, according to extax. You need to declare all your foreign employment income AND any other income you receive from that country.
Also read: 12 last minute tips to save on your taxes
Over-claiming for rental property/ holiday home
Remember you can’t claim deductions on a holiday rental property that is not actually available for rent. If your holiday rental is only available to rent for part of the year, you must adjust your deduction claims appropriately. You can also only claim expenses for the period of the year the property is available for rent.
No receipts
Without receipts, you can only claim a maximum of $300 worth of work related expenses.
However, it is likely you are eligible to claim more than $300, which can boost your tax refund massively so keep records and track of all of your receipts throughout the tax year. Remember, if you over-claim and get a bigger refund than you’re entitled to, the ATO can ask you to repay the difference – plus interest charges and possible penalties. Ouch.
Also, keep in mind if you already owe money to the ATO, Centrelink or another government agency, the ATO might offset this debt outstanding against what’s owed to you from your return.