It’s tax return time and the ATO says get it right
Tax returns are coming in and you may be scrambling to file your refund, especially if you think your money should be refunded. But the ATO has a warning: Do it right, don’t rush it. And whatever you do, don’t BT.
Thanks to unprecedented data matching and an increased focus on catching fraudulent claims, these are five mistakes that could send you into audit this year.
Mistake 1: Claiming mileage is 5000 km without an invoice. It has recently become common for taxpayers to claim a maximum mileage of 5000km without fuel receipts.
The ATO is believed to have sent half a million emails to Australian motorists as part of a crackdown that this does not apply. Because here’s the thing: You can’t claim your daily commute, and you need to have records to prove you’ve driven work-related miles.
Your options are to keep a journal or use what’s even easier. myDeductions tool in the ATO app.
Are these records from the last tax year? Then, in the cents per kilometer method, simply multiply the number of work-related kilometers driven by the per kilometer rate.
The deadline for do-it-yourself tax returns is October 1. Do yourself a huge financial favor and do it right.
Last tax year it was $0.88. At a maximum of 5000 km traveled, this means a tax deduction of up to $4400; legitimate. So make sure you start keeping records for the current tax year.
Mistake 2: Claiming a $300 deduction without a receipt. A myth that you can infer so much without evidence – a very common myth.
There were never any ‘free’ or ‘automatic’ refunds. Instead, you only need recordsNot a receipt for business-related expense claims under $300. These can be calendar entries or a spreadsheet.
Furthermore, the ATO website explains that this does not include specific claims such as: “car costs, meal allowance costs, award transport, payout costs and travel allowance costs”. All of these need to be itemized.
But keep in mind that everything is different this tax year (as with next year’s tax return). There’s a much bigger $1000 automatic Deductions can be made without a receipt. But the trap here is that your real inferences may actually be greater.
Start collecting this year’s receipts now to double-check and make sure you don’t miss a refund. And for your tax return last year, you will need to search receipts for deductions for items you excluded.
Mistake 3: Doubling up on working from home expenses. There are two options; simple. Under the flat rate method, you can claim $0.70 per hour you work from home throughout the year. This covers all additional costs and you don’t need a separate home office or dedicated workspace.
What you need is a record of the total number of hours you worked from home; A timeline, list, or diary is important. You also need to have a record of each of your expenses, for example an electricity and internet bill.
real The cost method in which you divide your private and commercial housing costs. (And note that the ATO won a landmark federal court decision banning employees from claiming part of their housing rent for working from home.)
There is a big problem with demanding things that are not actually work/work related. The broad test for a legitimate deduction is threefold:
- You have to bear the cost personally and there are no refunds.
- The cost must be directly related to earning your income.
- And – you guessed it – get that receipt!
If the expense is a mix of personal and business-related expenses, you can claim the business-related portion. there is one comprehensive list of current outages for different industries.
And don’t make the mistake of requesting things like business lunches, personal care or casual clothes, childcare, gym memberships, weight-loss pills, or carry-on bags (unless they’re just for a laptop) (they may be funny, but they’re also common). And you can forget about your daily coffee; The tax office does not consider coffee an important tool for your income!
Mistake #4: Not knowing your specific selling rules. Selling something on Facebook Marketplace? Unless you are in a for-profit business, you are right not to declare your income.
The ATO requires you to report income from side hustles, including regularly selling goods for more money. Hobbies, such as casual sales of household or personal items, are also generally exempt.
However, this is different if there is a regular sales pattern. All digital selling platforms will report high volumes of seller data to the ATO under increased reporting rules; so think carefully about whether you need to come clean and report income.
What will happen to capital gains tax (CGT) and the things you sell under the new rules? The criteria for qualifying for CGT have not changed; An item must have been purchased for more than $500.
In other words, a work of art whose value is appreciated may well be captured. However, even if you sell a caravan in which you enjoy traveling for a higher price than you paid, it may not be possible.
This is because the motorhome qualifies as a personal use asset and a higher purchase threshold of $10,000 applies before tax is applied to any sales profits. From 1 July 2027, CGT will be a fixed minimum rate of 30 per cent. There will be intense demand for valuers to establish the cost base of many assets at that date.
Mistake 5: Not declaring all gig economy earnings. Data on gig economy earnings is now strong. Companies such as Uber, Airtasker and Fiverr are squarely on the ATO’s radar.
Going to gigs is considered a job or self-employment, and since no taxes are withheld by the company itself, it’s wise to set aside perhaps 30 percent of your earnings to cover the last part of your tax bill.
In the case of Uber, your business-related expenses will of course be deducted from your earnings, including the relevant portion of vehicle expenses such as fuel registration and maintenance.
You should know that if your gross earnings are $75,000 or more, you’ll generally need an ABN or Australian business number and you’ll need to be registered for goods and services tax (but Uber and ride-sharing services are classed as “taxi rides” and you’ll need to be registered for GST regardless).
The deadline for do-it-yourself tax returns is October 1. Do yourself a huge financial favor and do it right.
Nicole Pedersen-McKinnon is the author of: How to Get Mortgage-Free Like Me? . Follow her on Facebook, X And instagram.
- The advice given in this article is general in nature and is not intended to influence readers’ decisions about investments or financial products. They should always seek their own professional advice, taking into account their personal circumstances, before making any financial decisions.
Expert tips on saving, investing and making the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.
