Helpful Advice to Apply to Your Tax Return Preparation
It pays to put in a little time and effort to make sure you have every detail of your return correct and that you have avoided some of the more common traps that people tend to fall into.
This is important, knowing that 84 per cent of taxpayers expect a refund and the average size of refunds last year reached close to $3,000.
Below are the best tips for doing your taxes correctly this year.
Make an Eligible Claim
Any expense you incurred in generating your income is eligible for a deduction. So don’t be afraid to claim an expense if you’ve incurred it for work-related reasons and have the supporting documentation.
Avoid Overstating Deductions
Only the amount you spent may be claimed. Therefore, only deduct expenses that you can show you paid for by providing an invoice, receipt, or bank statement, and avoid inflating deductions to get a higher refund.
Self-lodgers using the ATO’s myTax programme are watched by the ATO’s computer systems while preparing their returns to ensure they aren’t overclaiming. The ATO’s computer systems compare your claims to those of people with similar circumstances.
If your claim raises red flags, myTax will issue a severe warning and encourage you to reconsider that deduction. If you disregard the warning, an audit may be coming your way.
If it turns out that your deduction claims were false, you’ll have to pay interest on top of the tax you could have avoided. The interest levied by the ATO is determined on a daily compounding basis and is based on the rate for 90-Day Bank Accepted Bills, but with a 3 per cent uplift factor.
A penalty of 25 per cent to 95 per cent of the tax evaded may also be imposed if the ATO thinks you acted irresponsibly.
Use Caution When Using Pre-Filled Data from the ATO
You may pre-fill a lot of your income information directly from the ATO’s computers with the click of a button. However, be cautious and avoid assuming that income data is accurate or comprehensive.
Always utilise your own data as the primary source. Some individuals believe that since the data is from the ATO, it must be accurate. That is a perilous supposition.
Even though you copied the data directly from the ATO’s pre-filled data, the legal responsibility will fall on you if you omit income and the ATO questions you.
Note the Basics
The ATO holds up a lot of tax returns because people make simple errors like this. Inform the ATO of any name or address changes before filing your return.
The ATO won’t be able to connect it with your Tax File Number if you lodge under different details. There will be delays.
You must include your bank information on your return since the ATO no longer mails refund checks. Also, your return may disappear into thin air as the ATO manually matches your information if you accidentally typed an extra letter into a crucial field like your name.
Conclusion
Taxes are complicated, which is why 74 per cent of Australians use a tax professional to complete their tax returns. If you file your tax return incorrectly, you could face penalties from the ATO or a smaller refund.
The majority of consumers find it much less stressful to simply provide their tax agent with all the information they need, trusting that the agency will complete their return accurately and completely.
A seasoned agent will typically be adept at spotting those elusive tax deductions you didn’t know you could claim, so they can frequently more than pay for themselves.
SMB Accounting is here if you need help with tax returns in Sunshine Coast. We can do your individual tax returns, small business accounting with various small business accounting packages available, SMSF audits, and more. Call us today to get started.