It’s tax time once again, which means it’s time to fire up your calculator and start getting your affairs in order. Working with a professional tax accountant can streamline the process. However, if you plan to lodge a personal return yourself, it’s important to do it properly the first time to avoid any problems with the ATO. Even simple, unintentional tax return mistakes can land you with an audit, so this is not something to speed through.
With decades of experience helping Australians with their taxes, ITP’s income tax professionals have seen every tax return mistake you could imagine. We cover the wilder ones in our dangerous tax deductions article, but for this post, we’ll be taking you through some easier mistakes to make. You might not be reckless enough to attempt to claim your pet as a tax deduction, but the following tax mistakes could still get you in trouble.
Forgetting to Declare All Forms of Income
You must declare all sources of income and claim all your tax deductions when preparing your tax return. Forgetting to do so can propel you onto the ATO’s radar. Here are the different things you need to include in your tax return:
- All sources of income, including temp jobs and money from the shared economy
- Government payments and allowances
- Super payments, pensions, and annuities
- Crowdfunding
- Investment income
- Cryptocurrency gains
- Compensation and insurance payments
- Prizes and awards from an investment body
Estimating Tax Deductions
Inaccuracy is a common mistake when filing a business tax return, but complaining that “everyone does it” won’t help you if you get audited. So, always use accurate figures when entering your income, deductions, and the tax you’ve paid in your tax return. The Australian Taxation Office has records of all taxes paid, so you can compare your data against the information they have.
To ensure you’re not missing deductions that could save you hundreds (or even thousands) of dollars, use ITP’s handy downloadable tax checklist. Once you’ve listed all your deductions, you can start estimating your tax return with ITP’s Australian tax calculator.
READ CAR EXPENSES – WHAT YOU SHOULD KNOW TO REDUCE YOUR TAX
Forgetting the Proof of Purchase
Without any receipts that cover your expenses, you can only claim up to $300 worth of work-related expenses that you have actually incurred. Even within this $300 limit, the ATO’s general motto is “no proof, no claim.” So be sure to keep your receipts for each tax year in a safe place. Also note that in 2024, the ATO may be paying closer attention to tax returns that claim the full $300 amount without providing any receipts.
With automated systems now helping the ATO crack down on these tax return mistakes, it’s crucial that you keep good records. Tracking and effectively storing all your receipts is the best way to avoid problems during tax time. There are plenty of smartphone apps available now that make it easy to take photos of your receipts instead of keeping the paper copy.
How long do you need to keep tax receipts?
You’ll need to store them for a minimum of 5 years after lodging your relevant tax return in case the ATO wants to check.
Boost your refund while avoiding tax mistakes
If the idea of making a mistake on your tax return is stressing you out, please know that there is an easy and affordable solution. ITP’s professional tax agents have been supporting Australians with their taxes for 50+ years and counting, and during this time we’ve kept our fees incredibly competitive. Our skilled and qualified tax agents can help you avoid these simple tax return mistakes while at the same time maximising your refund.
With tax experts handling all the hard work, you can ditch the time-consuming paperwork, skip tax season stress, and free yourself from fears of being audited. Our affordable fee is claimable on your next tax return, and best of all, you’ll be entitled to free tax advice all year round. Give us a call on 1800 367 487, or use our office locator to book an appointment with your nearest ITP accountant.
ITP The Income Tax Professionals have over 240 branches throughout Australia and help over 200,000 Australians each year with their tax. Our award-winning service guarantees professional tax help and advice that will maximise your tax return.
DOWNLOAD THIS ARTICLE: Common Tax Return Mistakes You Should Avoid