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About 12 million Australians submit tax returns each year.
H&R Block Busselton director Kevin Bertelli said getting it wrong can mean missing deductions, a smaller refund or worse, omitting income or claiming deductions you’re not entitled to then being penalised following an audit by the Australian Taxation Office (ATO).
Here are some tips to get your tax return right:
Don’t rely on pre-filled data from the ATO – These days, third-parties such as employers and banks report payments they’ve made to you straight to the ATO, but many third-parties don’t pass on that data until well into July or August.
Always use your own information (eg. payment summaries) as the key source data. Some assume because the data comes from the ATO, it must be right. But if you omit income and get questioned by the ATO, the legal burden is on you.
Don’t embellish deductions – You’re entitled to claim a deduction for any expense which you incurred in earning your income. But you must have actually spent the money. Don’t inflate deductions in order to get a bigger refund. Only claim for costs you can prove you incurred.
Do claim what you’re entitled to – If you incurred a work-related expense and can prove it, claim it. Common deductions are the cost of tools and equipment, using your own car for work (not driving to and from work), and costs of travelling for work.
If you work away from home and incur meal and accommodation costs, they are deductible up to the amount you actually spent. If your employer pays you an allowance to cover your traveling costs, it is taxable.
Plan for next year – When you’re busy trying to get this year’s tax return right, it might seem premature to think about next year’s. But if you end the financial year with all your paperwork tidily arranged, you’ll immediately be ahead of the game.
Remember, if you spend money on anything as part of your job, get and keep the receipt. Even if you’re not sure if it’s deductible, at least you have the paperwork so your accountant can advise you later.
Take photos of receipts and store them on your phone using apps such as the H&R Block tax app or the ATO’s myDeductions app. The ATO accepts electronic copies so you don’t need to keep paper versions.
Get help – There’s a reason 74 per cent of Australians use a tax agent to prepare their tax return - tax is complicated.
The ATO’s former e-tax system has been retired, so users must now engage an agent or use the new myTax system. Given e-tax users tended to have more complex tax affairs, many will switch to an agent, safe in the knowledge their returns will be accurate. Experienced agents also sniff out obscure deductions you didn’t know you could claim.
