The Australian Taxation Office (ATO) has identified the top 10 tax myths and misunderstandings it says are causing incorrect claims.
Assistant Taxation Commissioner, Kath Anderson said unreliable tax advice was leaving taxpayers exposed.
“Taxpayers listen to advice from many sources, including tax agents, colleagues, family and friends, and even helpful shop assistants,” Ms Anderson said.
“While some advice is correct, some isn’t and it’s leading to mistakes and errors that can be costly.”
She said that top of the list was the myth that everyone was entitled to claim a “standard deduction” of $150 for laundry, 5,000 kilometres for cars or $300 for work-related expenses.
“While it’s true that you don’t need to keep detailed receipts for deductions up to those amounts, it’s not an automatic entitlement,” Ms Anderson said.
“You still need to meet the three golden rules — you must have spent the money yourself; it must be directly related to earning your income; and you must be able to show us how you calculated your claim.”
She said a myth gaining popularity was that taxpayers only needed to keep credit card statements as proof of claims.
“Around half of the adjustments we make are because taxpayers didn’t keep proper records and therefore they could not demonstrate that they spent the money, what it was spent on and how the expenditure links to earning their income,” Ms Anderson said.
“A credit card statement will not usually have enough detail to support the claim.”
She said some items were claimable for a small number of taxpayers but it was a myth that the majority could claim.
“There are only a handful of taxpayers with special circumstances who can claim things like gym memberships or make-up containing sunscreen. For most, there isn’t a link to earning their income,” she said.
With more people working from home, Ms Anderson said the ATO was becoming concerned about taxpayers claiming their entire Foxtel or Netflix subscriptions, or their whole phone bill, on the basis that some part related to earning their income.
The ATO’s Top 10 tax myths can be accessed at this PS News link.
