Done your tax return yet? Time to get cracking
Just like a Melbourne Cup winner tearing down the outside, the October 31 tax deadline can quickly rush up on you. As the Australian Tax Office can fine those who fail to get theirs in on time, it might be time to get cracking.
The good news is you still have time to get it done, but it’s best to start preparing now if you haven’t already.
That’s because the worst thing you could do is leave it to the last minute. A rush job can lead to mistakes and punishments from the ATO, which is never good for staying on track with your mortgage.
With that in mind, it’s a good idea to consider where the ATO says people tend to go wrong.
Here are the five most common errors people make
1. Leaving out some of their income. Did you work a temporary job or earn some money renting out a room on Airbnb? Maybe you got lucky and even made a profit on cryptocurrency?
It is all taxable and needs to be included in your return.
2. Claiming deductions for personal expenses.You cannot claim the cost of getting to and from work, normal clothes or personal phone calls.
3. Forgetting to keep receipts or records of their expenses. If you can’t prove you bought it, don’t claim it.
4. Claiming for something they never paid for. Sometimes people think they are entitled to a “standard deduction” for things like work expenses. Unfortunately no such thing exists.
5. Claiming personal expenses for rental properties: If you use a rental property for personal use sometimes – such a holiday home – make sure you don’t claim for the period you used it.
Likewise, if you have multiple assets under the one loan – say a car or a boat lumped in with your mortgage – make sure you only claim the relevant portion.
The three golden rules
If you are still confused about what you can claim, the ATO says there are three golden rules for work related expenses: you must have spent the money yourself (and not have been reimbursed), it must be directly related to earning your income, and, finally, you must have a record to prove it.
The last point is worth reiterating. Of all the adjustments made by the tax office, around half are because the person claiming had no records, or their records were of a poor quality.
Good record keeping is the key.
If you do make a mistake on your return and realise it after filing, don’t panic.
Getting in contact with the ATO as soon as possible and letting them know what went wrong will help you avoid, or at least reduce, any possible penalty.
Need help getting kicked into top gear?
Every now and then we’re all guilty of leaving something a little too late and needing an extra (stable)hand.
The good news is that there’s still time.
So if you’d like a hand with beating the deadline on your tax return then get in touch. We’d be happy to put you in touch with an accountant who can help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.