To avoid an audit from the Tax Office or a reassessment that could trigger a large tax bill, it is important that all taxpayers are correctly reporting income and expenses when it comes to preparing and lodging their return each year.
There are often misconceptions about ‘entitlement’ to claim certain deductions or it being unnecessary to disclose some types of income. We have provided below a summary of the top 5 mistakes taxpayers are making on their tax return, so that you can avoid getting trapped.
- Leaving out some of their income – forgetting money earnt from a temporary job, interest earnt on a bank account, or income from a side-line business such as Uber.
- Claiming deductions for personal expenses – travel from home to work that isn’t deductible, purchase of ordinary clothing with no logos, or not apportioning items that are partly work and private such as telephone or home internet costs.
- Forgetting to keep receipts and records – to claim a tax deduction for expenditure there must be receipts and/or record of the purchase.
- Claiming for something they never paid for – often because they think people are entitled to a ‘standard deduction’ even if they haven’t actually incurred the cost, such as travel costs or meal costs.
- Incorrectly reporting rental income and expenses – forgetting to apportion expenses when the property is used for part of the year privately (holiday house), or failing to report income when renting out a room or part of the house for a temporary period (airBnB).
If you want to ensure you avoid an ATO audit and get the right advice, contact our office for assistance with your business and personal taxes.