Common Traps to Avoid ATO Tax Audit

1. Common Traps to Avoid ATO Tax Audit Posted on 25 July 2018 It’s Tax Time 2018! Millions of taxpayers already lodged a tax return and millions more will lodge in the coming weeks. If you’re doing your tax return for the first time or if you plan on doing it yourself, you may want to beware of common traps in lodging your tax refund. We rounded up a list for you to take note of this tax year: 1. Maximise your work related deductions You’re entitled to claim a deduction for any expense which you incurred in earning your income. So, if you have incurred a work-related expense, and you have the paperwork to prove it, don’t hesitate to claim it. Amongst the common deductions many taxpayers claim are: 1.Clothing, laundry and dry-cleaning expenses 2.Self-education expenses 3.Costs of using your own car for work. This doesn’t include driving to and from work but it does include visiting clients or suppliers, and driving from one work-site to another

2. 4.Costs of travelling for work. If you are required to work away from home, and you incur costs on meals and accommodation, those costs are deductible up to the amount you actually spent. If your employer pays you an allowance to cover your traveling costs, that allowance is taxable 5.Costs of tools and other equipment. Whether it’s the cost of tools if you are a tradie, or the cost of a new computer, laptop or mobile phone if you are office-based, if you spend it, you can claim it, provided it’s used for work purposes (if it’s used partly for work and partly for private use, you can only claim the work-related proportion). A good tax accountant will be able to tell you exactly what you can and can’t claim, minimising the chances of an audit at a later date. 2. But don’t over-claim! Deductions are not a direct refund to you. These will be deducted from your income which will result to lesser tax due. While it may be tempting to claim more, you can only claim work expenses you actually spent. So, don’t inflate deductions in order to get a bigger refund. That’s a red flag! The ATO will need you to ‘substantiate’ or at least have a record to prove the deductions you claimed. To save on tax agent fees, you may want to do your own taxes using the ATO website. But note that the system will trigger an alarm if you are deemed to be over-claiming your deductions. If you ignore this warning, you may be audited later on! If your deduction claims are found to be incorrect, you will be required to repay the tax avoided, plus pay interest of about 9% per annum. If the ATO believes that you have acted carelessly, a penalty between 25% and 95% of the tax avoided may also be charged. 3. Use Pinkcow! Why do it yourself when you can pass it on to experts and professionals? DIY-ing your tax return may cause more headaches later on if the ATO lowers your refund or charges you with hefty penalties. You are can just send us your paperwork through our tax form, and we will send your free tax estimate prepared by registered tax agents. If you have any questions about your estimate, just email us back and we will happily walk you through it before we lodge it with the ATO. If you paid a tax agent to do your taxes, that fee is a deduction for next year’s tax return! But that’s just the bonus. What’s more important is your tax return will be accurate and complete. You can be assured that you will get all your deductions in order and you can sleep better at night knowing the ATO will not be checking on ya! Claim Your Tax Back Now!