You should find yourself pretty well tax ready by now and ready to lodge your return, but before you do you might want to look out for theses common mistakes that taxpayers are making this tax season.
1. Lodging before all your ATO data is available or failing to report all your income
The ATO have sophisticated data-matching systems that can track your income and other relevant data, if you lodge your return before receiving all of your information then the ATO may just amend it and this could result in a tax bill.
2. Claiming the wrong thing
Please do not listen to tax advice from friends and colleagues – you may be claiming something you are not allowed to. Remember that to claim a deduction you must have spent the money yourself (not being reimbursed), you must have a record to prove it and it must be directly related to earning taxable income.
3. Forgetting to keep receipts
Deductions will be disallowed by the ATO if you do not have proof of purchase. An easy way to keep your records is by using the myDeductions ATO app which you can use to record expenses and take photos of receipts.
4. Claiming for something you never paid for
Just because some deductions allow a claimable set rate without having receipts, doesn’t mean that you can automatically claim it. If you want to claim items like the laundry deduction, kilometers, meals and accommodation then you can’t just use the ATO’s set rates without proving that you actually spent the money.
Monthly Tax Tip
Are you paying more than 27.5% tax on business income? It may be beneficial to switch your business to a company entity. A small business company only pays a flat rate of 27.5% tax on profits and this rate is slowly reducing to 25% by 2022. If you are currently trading your business as a sole trader, partnership or trust then your business profits will be taxed at marginalized rates and you could find yourself paying up to 45% tax! A company entity also provides some great legal benefits and asset protection. Need we say more….
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