Lodging tax returns each year is a requirement in Australia. However, it can be a daunting task, especially for those lodging their return for the first time. Failing to lodge your returns correctly can lead to penalties and fines, so it’s essential to avoid making mistakes.
Here are a couple of common tax return mistakes in Australia that you should be aware of:
1. Forgetting to Declare All Income
One of the most common mistakes is failing to declare all your income. Many forget to declare income from side hustles or part-time jobs, leading to later trouble. The Australian Taxation Office (ATO) has access to various information sources, including bank accounts, financial institutions, and employers. You must report all your income, including interest, dividends, and rental income, to avoid penalties and fines.
2. Claiming Ineligible Deductions
Another common mistake is claiming deductions that are not eligible. While it’s important to claim all the deductions you’re entitled to, you must ensure they are legitimate. Some common ineligible deductions include personal expenses like gym memberships, travel expenses between home and work, and clothing expenses. You can only claim deductions that are directly related to earning your income. As such, it’s important to keep records and receipts to support your claims.
3. Not Keeping Accurate Records
Keeping accurate records is crucial when it comes to filing tax returns. Many people make the mistake of not keeping records of their income or expenses, making it difficult to file their taxes correctly. You should keep records of all your income and expenses, including receipts, invoices, and bank statements. This will help you claim all the deductions you’re entitled to and avoid penalties.
4. Failing to Lodge on Time
Another common mistake is failing to lodge your tax return on time. The due date for lodging your tax return in Australia is usually 31 October each year, however if you use a Registered Tax Agent, the lodgement date can be up to the 15th May of the following year. If you fail to lodge your tax return by the due date, you may face penalties and fines. If you cannot lodge your tax return on time, contact the ATO as soon as possible to make alternative arrangements.
5. Not Seeking Professional Advice
Finally, lodging tax returns can be complicated, and many people make the mistake of not seeking professional advice. A tax professional can help you understand your tax obligations and ensure you claim all the deductions you’re entitled to. They can also help you avoid making mistakes that could lead to penalties and fines. While hiring a tax professional may cost you money, it’s a worthwhile investment in the long run.
All in all, lodging tax returns can be a daunting task, but it’s essential to avoid making mistakes. Failing to lodge your return correctly can lead to penalties and fines, which can be costly, not to mention a huge waste of time. So, by avoiding these common mistakes, you can ensure that your tax return is lodgedcorrectly and on time. If you’re unsure how to lodge your return or need help, seek professional advice from a registered tax agent or accountant!
SMB Accounting offers individual tax returns along with small business accounting, SMSF audits, and many other things to help individuals and organisations stay on top of all their financial needs. If you are looking for a tax professional in Australia to assist with tax returns, contact us today.