Over five million individuals are yet to lodge their 2011 income tax return according to the latest Australian Taxation Office (ATO) progress report.
With the impending 31 October deadline just weeks away, the ATO has processed over 90% of the 6,490,000 returns lodged since 1 July with the value of refunds issued totalling $12.29 billion.
Tax expert Adrian Raftery, aka Mr Taxman, says that he is staggered with the number of taxpayers who still have to meet their annual tax obligation.
“Five million? Don’t people want their refunds? I’ll take them!” said Raftery, author of 101 Ways to Save Money on Your Tax – Legally!.
“There are a number of slackos out there that simply procrastinate and not only don’t lodge a tax return on time, but have several returns outstanding. Get them in as you could be costing yourself thousands in unclaimed refunds. My record was submitting 33 years’ worth of tax returns which netted the lucky person over $70 thousand in refunds!!”
Raftery expects the Australian Tax Office (ATO) will ramp up its advertising in coming weeks to get the stragglers to submit. He warns that if you are late with lodging your return, penalties may apply.
“If you know that you have to pay then lodge your return to avoid unnecessary late lodgment penalties. The ATO is always willing to negotiate payment plans but they will charge interest (currently 11.86%).”
To help with preparing your return, Raftery shares with us seven common traps to avoid when doing your tax.
1. Education tax refund – According to government estimates, there are approximately 400 000 (or one in five) parents who are eligible for the Education Tax Refund but have not claimed for it. If you receive Family Tax Benefit Part A, have you been missing out on getting 50% back on certain education expenses for your schoolchildren?
2. Car log books – if you make a claim for motor vehicles expenses under the log book method then it is obvious that make sure that you actually have a log book prepared in the correct format. It must be for a continuous 12 week period and prepared within the last five years. If you have changed your car or your job duties since you did your log book then you must prepare a new one.
3. Mathematical errors – small errors could result in big mistakes. A wrong number here or a bad calculation there may cost you thousands. So if you do your return yourself then make sure you “measure twice” and avoid any unnecessary headaches. Make sure that you go through all your receipts and graze through every line of all bank account and credit card statements because there are a myriad of deductions that you might be missing out on. If you have more than $300 worth of total deductions then you must have documentary evidence for the full amount – not just the amounts over $300.
4. Medicare levy surcharge – if you have private health cover or a low income earning spouse, then make sure you put in those details to avoid inadvertently getting slugged with the extra 1% Medicare levy surcharge.
5. Rental properties – the ATO always sees a number of errors with rental property tax returns including initial repairs, interest on loans which include a private component, borrowing costs and claiming depreciation without a quantity surveyor’s report. I have also seen a number of returns where the taxpayer simply didn’t realise everything that they could claim, particularly land tax and strata levies. If you have an agent, then ask them for a summary of income and expenses to make the return process easier.
6. Omitted income – this year the ATO data-match over half a billion transactions and expect to contact 400,000 taxpayers with discrepancies on their interest, dividend, trust and managed fund income. This process is quite lucrative as almost $330 million in tax revenue was generated last year due to audit investigation by the ATO. Overseas income and capital gains are particular areas of focus this year. You can run from the taxman but you can’t hide.
7. Doing it yourself – just as most people can change a tyre, most of us have the ability to do our tax ourselves but it usually pays to get an expert to look at your tax for you. The last thing you need is a knock on the door from the taxman because you claimed too much. A registered tax agent knows where the boundaries are in terms of what you can and more importantly can’t claim. And their fee is tax deductible too!
These tax tips were provided by Mr Taxman, Adrian Raftery, author of 101 Ways to Save Money on Your Tax – Legally! published by Wrightbooks, $24.95.