With the end of financial year fast approaching it’s a good idea to start considering what your income is, what you’ve spent on deductions and how you want your individual return lodged.
The main missed item that the ATO finds on individual tax returns is actually income. When considering what your income is for the year you can’t just stop at salary amounts. Here’s a quick guide to income you may have received but not considered including:
– Salary and Wages
– Interest on bank accounts and Term Deposits
– Capital Gains tax if you sold anything throughout the year
– Pension amounts for persons under 60 years of age
– Foreign Income
– Rental Property Income
If you provide your TFN to an institution you invest with the ATO will most likely have these income amounts on file and adjust your annual return accordingly. If it is a large amount you have missed it might trigger an audit and penalties if it is seen as a deliberate avoidance of tax.
While the ATO doesn’t want you to miss out on claiming your deductions there’s a few things to consider before deciding to claim that amount. Before you claim it make sure that:
– You spent the money yourself,
– It must be related to your job, and
– You must be able to prove it.
The ATO is focusing on amounts paid by employers for employees that are being double claimed on tax returns and for expenses of a private nature such as travel from home to work.
Each year the ATO has a number of returns lodged with incorrect factual information. In recent years these include:
– Incorrect TFN
– Incorrect name
– Incorrect bank account details
– Providing the year of birth rather than the full date
– Not completing the income test section or spouse section
– Lodging duplicate returns for the same year
– Incorrectly using the additional information schedule.
By using the online lodgment tools provided by the ATO, or utilizing a tax agent, these errors are less likely to be an issue.
Easy to fix accidents – the ATO know that generally most people try to do the right thing but unintentional errors occur. If an error occurs simply amend your tax return and you can simply pay the additional tax amount and avoid a penalty from the tax office. If the tax office owes you money it will be refunded with interest.
Lodge on time – If you do your own tax return make sure you get on and lodge by 31 October to avoid late penalties.
Tax Agents – Many people don’t realise that tax agents have an extended lodgment date (on most occasions) to 15 May of the following year. If you are thinking about using a tax agent you must contact them prior to the end of October to qualify for the extended lodgment date.
Should you wish to discuss any of the information above please contact our office.