Tax time myths can cost you your refund, warns ATO

Jul 30, 2018

TAXPAYERS are making potentially costly mistakes on their tax returns by claiming wrong deductions based on myths.

Tax time 2018 is almost one month old and the Australian Taxation Office is noticing many people putting their faith in incorrect advice given by workmates, family and friends.

It says the most common myths include believing there is a $150 automatic deduction allowable for work-related clothing and laundry, that credit card statements can be used instead or receipts as evidence, and claiming makeup with sunscreen if people work outside.

“Quite often it’s well-intentioned family and friends. We hear of people being down the pub and hearing what their mates and colleagues claim,” said ATO assistant commissioner Kath Anderson.

She said in some workplaces there was almost a competition to get the highest tax refund, with employees seeking agents known for big deductions.

“There are some people who need further education, even in the agent population.

“Where we see a large claim that looks inaccurate we take action on that straight away.”

The ATO’s technology spots potential mistakes in real time as taxpayers fill out returns, and sometimes “nudges” them into rethinking their deductions.

“We are also seeing people who are leaving out income, and we have been adjusting quite a few returns,” Ms Anderson said.

Deakin University Associate Professor Adrian Raftery said there was “huge scope for errors” and people who were unsure should speak to a qualified tax agent, phone the ATO or search its website for information including guides about deductions for specific occupations.

“The key thing is did you incur the expense and was it incurred in gaining assessable income,” Dr Raftery said.

“If you don’t have receipts and are fudging it, or are claiming 100 per cent of anything that is also used for personal purposes like a mobile phone or internet plan, you are flouting the rules,” he said.

The ATO’s Ms Anderson said many taxpayers were trying to “fly under the radar” by only claiming deductions up to limits where receipts were not required.

“About 1.4 million people claim $150 for uniforms, about 1.4 million are claiming exactly 5000km for cars, and over 600,000 people are claiming exactly $300 for other work related expenses. That’s a lot of people,” she said.

Original article published here on 30 July 2018 in The Mercury.






Post a New Comment

comments-rhsLatest Comments

  • "Hello Taxman! I invested in BTCUSD trading using MT4 trading platform using a broker in HongKong. I am a Australian resident for tax purposes. I used to trade only 2-3 times a month. I made profilts..."

    By: Santosh at Aug 09, 2020 4:05AM

    Post: Foreign currency trading

  • "Hi Mrtax I’m a sole trader with an ABN, I work for myself as a Nanny. Would my home be considered my place of Business/work, where I then travel to my clients home to care for the..."

    By: Jessica at Aug 07, 2020 11:41PM

    Post: Claiming car expenses

  • "No you can't James. The limit of 5000km per year applies to your car not the number of different income activities that you have. So if you claim 5000km against your employment, no cannot claim any..."

    By: Mr Taxman at Aug 07, 2020 12:08AM

    Post: Claiming car expenses

  • "Hi i am on salary and wage and also have a business. I am required to use the same car for both sources of income and have travelled well in excess of 5,000kms each for both. Am i able to claim..."

    By: James at Aug 04, 2020 2:34AM

    Post: Claiming car expenses

  • "Hi, Very informative post and really appreciate the effort you put into it. Every one now a days is trying to gather more information about Forex trading."

    By: Vantagepointx at Jul 29, 2020 6:08AM

    Post: Trading via self managed super fund (SMSF)