As Tax Time 2020 has started the Australian Tax Office reminds us of the most common mistakes taxpayers make in preparing their income tax returns.
These mistakes include:
- forgetting to notify the ATO if your circumstances have changed ( you have sold an asset and made a gain and therefore need to lodge a return after previously notifying them you no longer need to lodge, or you no longer have a taxable income and do not need to lodge a return) remember communication is key here;
- leaving out some of your income (e.g. forgetting a temporary or cash job, capital gains on share sales, property sales or even cryptocurrency, money earned in the sharing economy);
- claiming a deduction for expenses regarded as personal ( e.g. home to work travel. clothes that are regarded as normal clothing even if they are of a type required by your employer and not your personal choice, personal phone calls or internet);
- forgetting to keep receipts or records of expenditure (keep a copy of all your receipts, electronically on your phone, computer or a record keeping app is an excellent way to manage this);
- claiming a deduction for something the individual did not pay for (perhaps your employer reimbursed you);
- claiming the "standard" $300 deduction - there is no such thing!
- claiming personal expenses for rental properties, for times when you used the property or interest on loans secured over the property but used to purchase something else.
As ATO Assistant Commission Kath Anderson has said there are three golden rules for work related expenses:
- YOU must have spent the money yourself and not be reimbursed
- it must be DIRECTLY related to earning your income (in your current employment not a planned future income)
- you must have a record to prove it.
If you would like further clarification on any of these points please do not hesitate to contact our office.