ATO guide to the 5 most common Tax Mistakes

As tax time 2018 kicks off this weekend the Australian Taxation Office (ATO) has profiled the five most common tax mistakes and the personalities most likely to have tax time troubles.

Assistant Commissioner Kath Anderson said it’s often simple tax time mistakes and misunderstandings that trip people up. “While we know most people want to get it right, our audits and reviews show that there are five main areas where taxpayers are most likely to get it wrong.”

The top five tax mistakes include taxpayers who are:

  • claiming for something they never paid for – often because they think everyone is entitled to a ‘standard deduction’
  • claiming personal expenses for rental properties – either claiming deductions for times when they are using their property themselves or are claiming interest on loans used to buy personal assets like a car or boat.
  • leaving out some of their income – maybe forgetting a temp job or money earned from the sharing economy
  • claiming deductions for personal expenses – home to work travel, normal clothes or personal phonecalls
  • forgetting to keep receipts or records of their expenses

ATO assistant commissioner Kath Anderson said the tax office would be taking a more proactive approach this year in a bid to clamp down on agents and taxpayers who push the boundaries. “We are increasing our investment in education and assistance, as well as reviews and audits. This year we are expecting to make contact with more than 1 million taxpayers either directly or through their agents,” Ms Anderson said.

Contact will be made with taxpayers either directly or via their registered tax agent in the coming months.

If you make a tax mistake, don’t panic.

“We know people sometimes make mistakes or forget to include something on their return. If you’re in that situation, try to fix it as soon as you can to minimise any interest and penalties. Either contact your agent or lodge an amendment online.”

“This tax time we will be paying close attention to claims for private expenses like home to work travel, plain clothes, and private phone calls. We will also be paying attention to people who are claiming standard deductions for expenses they never paid for. Around half of the adjustments we make are because the taxpayer had no records, or they were poor quality.”

Further, Ms Anderson said the ATO would be taking a close look at income issues, such as temp jobs, cash jobs and capital gains on cryptocurrency.

ATO data matching technology also will target income from the sharing economy (eg. ride sharing or AirBnB-style renting), work related clothing/laundry claims, and work related car expenses.

More than ever, it’s important to gather your receipts and discuss your record keeping as part of your annual tax appointment. Contact Ample Finance on 03 9988 2911 or or make an appointment with us for anything you need this tax season.