The Australian Tax Office (ATO) is more attentive than ever when it comes to checking and processing tax returns. With sophisticated data matching systems, the ATO can automatically detect returns that are unusual or inaccurate – and they are very good at spotting inaccurate claims for income or deductions. When the ATO detects a problem, it can trigger an audit – which means you face delays, questions and more documents before you can get a tax refund.
Here are 4 common mistakes taxpayers make that can lead to an audit with the ATO:
- Using estimates rather than actual figures
- Not declaring overseas income
- Incorrect rental property deductions
Did you use any guesswork to enter your earnings, tax paid or deductions? If so, that’s a huge risk to take. The ATO obtains these numbers themselves, and compares what you claim against the figures they think are right. Even if you are out by only a few hundred dollars, this could trigger an audit by the ATO. It’s always best to wait until you’ve received your official PAYG before you enter your income and tax paid on the tax return – and use actual receipts to enter your deduction claims.
All Australian taxpayers are required to pay tax on their world-wide income. If you’ve worked overseas for several months of the year, ensure you declare this income accurately on your return.
- You can’t claim DEDUCTIONS on a property that is not genuinely available for rent – e.g. your holiday house.
- If you’ve allowed friends or relatives to stay in a rental property for part of the year free of charge, you must not include that period when calculating your overall expenses.
- If your rental property is only available to rent for part of the year, you must adjust your deduction claims based on the portion of the year the property was for rent. Your Etax Local Accountant can help you do this.
- If you and your spouse jointly own a property, you must split the expenses incurred evenly between both tax returns. On your return, you can specify your percentage of ownership of the property and you should claim your percentage of all claims and figures for that property.
Without receipts for your expenses, you can only claim a maximum of $300 worth of work related expenses. Chances are good that you can claim more than $300 and you can boost your tax refund – IF you kept the receipts or evidence to support your claims. It is critical that you keep good records and track of all of your receipts throughout the year. Remember, if you receive a bigger refund than you’re entitled to, the ATO can ask you to repay the difference plus interest charges and possible penalties added on top.