tax return

5 Common Tax Return Mistakes

Tax is often a difficult matter to deal with. In addition to keeping up with changing tax rates and changing rules, it’s easy to slip up on some of the smaller details along the way. 

As such, it is important to understand the most common mistakes most Australian personal tax return mistakes so you can avoid any unnecessary headaches.

Avoid Tax Mistakes

While most people lodge their tax returns quickly, there are several small but avoidable mistakes that can lead to audits fines and delays. 

One of the best ways to avoid any headaches and tax mistakes is always recommended to use a professional tax accountant. This ensures that any mistakes that have been made can be spotted early and quickly rectified.

Estimating Your Income

When you are self-employed it can be easy to forget to include all of your income in your tax return. Ensuring you use accurate figures is important as the ATO will compare these numbers to the records they have. If any discrepancies are found, this may cause delays and additional issues

Estimating Deductions

It is also important to be clear, accurate and transparent about your deductions. While these are only something you can keep track of the ATO will analyse every item you claim and analyse them against others in your line of work, location, industry, age group and their own benchmarks. If these look too high, it could lead to an audit.

Claiming Deductions for Personal Expenses

There is a fine line between what you can lodge as a deduction and what you cannot. For example, you cannot make a claim for the distance travelled from home to work, is private in nature and any associated expenses are not claimable. 

This is the same for phone expenses. You can only make a claim only for work calls, not your entire bill, which includes a high percentage of personal calls as well.

Forgetting to Keep Receipts and Records of Expenses

At any time, the ATO can call on you to provide receipts and evidence for your claims, so it is always best to have them on hand. Documents to put together include proof of work-related expenses, bank interest statements, and rental property income, to name a few.

Over-Claiming Expenses for Rental Property

One of the most common tax deduction mistakes pertains to rental and holiday properties. This is often due to the strict rules applied to when you can and cannot make a claim for property-related expenses. 

You cannot make claims for holiday rental properties, as these are not considered a source of income. If your holiday rental is only available to rent for part of the year, you must adjust your deduction claims based on the portion of the year the property was for rent. 

Conversely, you must declare all the income you earn from your rental property each financial year. You can only claim expenses for the period of the year the property is available for rent. 

Let The Experts Help You

There are many small yet avoidable mistakes you can make on your next income tax return. It is important to remember, however, that it’s not always easy to be aware of all the rules and requirements in place every single year.

This is where using a professional Brisbane based personal tax accountant can help. With Affinitas Accounting, you can ensure that your return will be done accurately and efficiently while avoiding any mistakes along the way.