MEDIA RELEASE (AU)

On the eve of a new financial year, Chartered Accountants ANZ is encouraging Australians to keep calm and take time lodging their tax return to avoid making costly mistakes.

CA ANZ Tax Expert Susan Franks said it takes a few weeks for the Australian Taxation Office (ATO) to prefill tax returns with information from employers, banks, health funds, government agencies and other third parties.

“If you rush to lodge your tax return before the information is pre-filled, you have a higher chance of making a mistake and you may forget to include some amounts,” said Ms Franks.

“Mistakes can be expensive as not only is tax payable, but tax debt attracts interest of more than 11 per cent and you could also face penalties.

“31 October is the date to remember – you must either submit by then, or appoint a registered tax agent, giving you extra time to get your return ready.

“The deadline to lodge a return when you have a registered tax agent usually falls on either 31 March or 15 May of the following year, depending on the tax liability of the last return you lodged.”

CA ANZ’s three golden rules when it comes to tax deductions are:

• You need to have paid or been charged the expense. If you have been reimbursed for the expense or someone else paid the expense, you cannot claim a deduction.
• You need to have proof of the expense. It helps to have copies of tax invoices.
• You need to ensure that it is a work expense. The deduction cannot be for expenses that are used for private or capital purposes. You need to apportion expenses to ensure that only the work component is claimed, not the private component.

“The ATO has 25 data matching programs that include information from investment property loans, motor vehicle registries and insurance companies, so it can ensure that people are complying with their tax obligations and detect any fraud,” said Ms Franks.

The following are red flags that may attract the ATO’s attention:

• Taxpayers claiming deductions for higher expenses than others in their line of work or industry.
• Taxpayers claiming deductions for expenses which conflicts with third party data.
• Taxpayers not reporting income which conflicts with third party data, including online shared economy platforms.
• Taxpayers who work in an industry that typically receives cash payments.
• Media reports of major events not reflected in a tax return, such as a significant contract or sale.
• Failure to lodge a tax return on time.
• A history of previous non-compliance.
• A failure to substantiate expenses by maintaining adequate records.

“You can prepare your tax return yourself through myTax but if you want greater peace of mind, use a tax agent. They are the experts – plus their fee is tax deductible the following year,” said Ms Franks.