Five Common Tax Return Mistakes
May 18th 2023Let’s be real, tax returns can be hard. After all, we didn’t really learn about them in high school… Here are 5 of the most common tax return mistakes we see when trying to complete your own return.
1. Not Reporting all assessable income
The ATO has some great data matching at hand, but the onus is still on the taxpayer to properly disclose all income sources. This may include things such as business or investment profits. Be sure to make your job easier by setting up great bookkeeping systems during the financial year.
2. Claiming expenses that aren’t tax deductible
Our tax return system is “self-assessed” which means you may think you’re able to claim expenses, even if they aren’t necessarily correct. To ensure you can sleep easy at night, when claiming expenses, you should ensure:
- That any loss or outgoing is incurred in gaining or producing your assessable income and;
- It is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income
3. Claiming the private portion of an expense as a business deduction
When you incur expenses that are both for personal and work purposes (e.g. phone and internet costs, rent etc), you are required to apportion the costs for tax purposes, aka claim the work percentage of the costs only. Some expenses have specific methods of apportionment to follow to make things easier.
4. Not using proper business records to substantiate claims
To claim deductions in your tax return for business expenses, you must have the records to substantiate your claims. Example of business records can include, but are not limited to the below:
- Tax invoices
- Travel diaries
- Receipts
- Worksheets for calculations and apportionments
5. Not seeking help
There’s a reason why so many people use a Tax Agent (nudge, MAURO). If you self-lodge and make mistakes you can either be made to pay back part of your tax refund, owe more tax than you anticipated or even have ATO penalties issued.
An experienced tax agent will help you not only accurately prepare and lodge but also scope out those additional tax deductions you had no idea about! And best of all, our tax agent fees are also tax deductible.
