Do you approach "tax day" with a certain amount of trepidation? Of course, nobody really enjoys submitting their return to the ATO, but if you prepare properly then there shouldn't be too much to worry about. What are some of the most common mistakes people make when they are filling in their tax return?
All That Data
As they get access to new technology and gather more data, the Australian Taxation Office is able to analyse individual tax returns more efficiently and uncover anomalies. It's gathered a considerable amount of information from people who are in identical occupations or industries to you and can therefore determine what is "normal" in your case. Automatic algorithms will immediately flag up your return for further analysis, should something jump out in this phase.
The Guessing Game
One of the most common mistakes people make is to estimate or guess what deductions they should be including in their return. This is very simple for the ATO to check of course as they already have records of the tax that you paid during the year. If you receive a regular wage or salary, then you should always wait for the official PAYG information before filling in your tax return.
Income from Overseas
One mistake people make is to "omit" any overseas income. Australians are liable to pay tax on overseas earned income as well and should include any investment or business income, or any capital gains based on assets held overseas.
If you own a property overseas which you use either for holidays nor for your residence during part of the year, then there are strict rules in place. If your holiday property is not made available for rent during the time when you're not there then you can't claim any deductions in relation to the property. Therefore, if you only make available that property to the rental market for part of the year you must adjust any deduction claims so that they relate only to those weeks.
Where's Your Proof?
Another mistake people make when submitting their tax return is to claim for expenses without proof that they have purchased. You must get into the habit of keeping those receipts, as if the ATO asks and you cannot furnish, then you won't be able to claim. It's possible that you may be asked not only to repay any difference they've refunded to you, but you may be penalised and asked for interest as well.
Why You Should Get Help
For these and other reasons it's a good idea to reach out to an accountant when it's rolling around to tax time. It could save you a lot of headaches in the long run.