25 September 2023

Tax mistakes take toll on taxpayers

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The Australian Taxation Office (ATO) has issued a guide to the five most common tax time mistakes and the personalities most likely to experience trouble.

Assistant Taxation Commissioner Kath Anderson said it was often simple mistakes and misunderstandings that tripped people up.

She said the top five mistakes taxpayers made included:

* Leaving out some of their income, perhaps by forgetting a temporary job or money earned from the sharing economy;

* Claiming deductions for personal expenses — home to work travel, normal clothes or personal phone calls;

* Forgetting to keep receipts or records of expenses;

* Claiming for something they hadn’t paid for — often because they thought everyone was entitled to a standard deduction; and

* Claiming personal expenses for rental properties — either claiming deductions for times when they were using their property themselves or were claiming interest on loans used to buy personal assets like a car or boat.

Ms Anderson urged taxpayers to get to know what they could legitimately claim.

“There are three golden rules for work-related expenses” she said.

“You must have spent the money yourself and not have been reimbursed; it must be directly related to earning your income; and you must have a record to prove it.”

She said that this ear the ATO would be paying close attention to claims for private expenses like home to work travel, plain clothes, and private phone calls.

“We will also be paying attention to people who are claiming standard deductions for expenses they never paid for.”

Ms Anderson said tax could be tricky, but not if good records were kept.

“Around half of the adjustments we make are because the taxpayer had no records, or they were poor quality,” she said.

“Yet it’s so easy to keep your records, using the myDeductions tool in the ATO app.

“Just take a photo, record a few details and then at the end of the year upload the information to your agent or to myTax.”

Ms Anderson said taxpayers could also check their tax time readiness with the ATO’s tax time quiz.

The quiz can be accessed at this PS News link.

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