Given that 84% of Australian taxpayers anticipate receiving a refund and the average size of returns exceeded $3,000 the previous year, it is in your best interest to double-check that your tax return is correct in every way.
Read on to discover more about tax returns and how to (finally) do it right this time around.
Assess Your Claim to What Is Legitimately Yours
Any expenditure that generates a profit can be deducted as a business expense. You should file a claim for any work-related expenses for which you have documentation. Most taxpayers are permitted to deduct expenses related to automobiles, travel expenses for work, and costs of equipment and work tools.
By speaking with an experienced tax accountant, you can lessen your chances of getting audited by learning which deductions are legal and which are not.
Skip the Dramatics, and Don’t Exaggerate
Only expenses are allowable deductions from taxable income. In order to earn a higher return, do not inflate your deductions; instead, ensure that any charges you claim can be proved by an invoice, a receipt, or a bank statement.
Self-declarants who use myTax are scrutinised by ATO computer systems to ensure they are not filing an excessive number of claims. If your deduction generates a warning, myTax will prompt you to reconsider accepting it. If you choose to disregard the notification, you risk being subjected to an audit.
If the deductions you claimed were incorrect, you must repay the tax as well as any relevant interest. The ATO calculates daily compounded interest at a rate equal to the 90-Day Bank Accepted Bill rate plus three percentage points. If the Australian Taxation Office (ATO) deems that your acts were negligent, it may levy a penalty ranging from 25% to 95% of the tax evaded.
Avoid Using ATO-Prefilled Data
At the moment, ATO’s computers can pre-populate a substantial amount of information regarding income. However, don’t assume that income data is correct or complete. Always rely on your own knowledge and firsthand information. Some people believe ATO data is reliable, but this is simply a dangerous assumption to make.
Even if you utilised pre-filled information on your tax return, you could face legal consequences if you disguised income and were later questioned about it by the ATO.
Focus On Everything, Especially the Essentials
The Internal Revenue Service can delay the processing of many tax returns due to trivial errors.
For example, if you’ve lately relocated or changed your legal name, make sure that before filing, you notify the Internal Revenue Service. If you use distinct information, the ATO will be unable to match your tax filing number.
Another example is if you have not provided bank account information. Because the ATO is unable to ship refund cheques at this time, make sure you give your bank account information. Otherwise, you don’t get the refund.
Furthermore, let’s talk about typos. If you add a letter to a required field, such as your name, the ATO will manually match your information. For example, if you add a letter to the “address” field, it will be automatically disregarded or ignored.
Do It Right with a Professional
Giving their information to a tax professional who will prepare their return in an accurate and comprehensive manner relieves the great majority of clients’ stress. When you hire a good agent, they should be able to identify hidden tax deductions that you were not aware of, resulting in the agent more than paying for themselves. Tax preparation fees are tax deductible!
It’s true that the Australian tax system is so convoluted that many people get confused. Thankfully, we can hire the services of a trusted professional tax agent. By learning with a professional, you can do your taxes right again and again!
Are you in need of a tax professional’s guidance? SMB Accounting is here to manage your finances, including your taxes. Work with us today!