As tax time approaches, the Australian Taxation Office (ATO) has highlighted three common errors made by taxpayers that it will pay close attention to.
- Work-related expenses
- Deductions on rental properties
- Failing to include all income when lodging
More than 8 million people claimed a work-related deduction in 2023, with around half of them claiming a deduction related to working from home. The ATO has updated the fixed rate method for calculating a working from home deduction. Taxpayers using this method need to keep comprehensive records to substantiate their claims. Deductions for working-from-home expenses can be calculated using the actual cost or the fixed rate method, but maintaining accurate records is crucial for claiming the expenses correctly.
The Australian Taxation Office (ATO) is closely monitoring claims for repairs and maintenance deductions on rental properties, especially those that may have been inflated to offset increases in rental income. It is important to be cautious when claiming general repairs and maintenance as immediate deductions and to be aware that expenses of a capital nature are not deductible as repairs or maintenance. The ATO advises that it is necessary to carefully review the records and claim deductions correctly. It is important to claim deductions correctly to avoid penalties.
The ATO advises against hastily lodging tax returns on 1 July. Taxpayers receiving income from multiple sources should wait until this information is pre-filled in their tax return before lodging. Waiting for this pre-filled information will make the tax return process smoother and help avoid errors. Lodging in early July increases the chance of errors, and the ATO recommends waiting a few weeks to ensure getting the tax return right. Taxpayers can check if their employer has marked their income statement as “tax ready” and if their pre-fill is available in myTax before lodging.
Credits
Swadhin Behura
One Business Services Team
