Rushing to complete your tax return as soon as the financial year ends might seem responsible, but it can lead to costly mistakes. According to CPA Australia, many taxpayers often make the error of submitting their returns early without fully preparing, which can lead to issues later on.
Last year, around three million Australians had already filed their tax returns by July 23, increasing to nearly 5.8 million by August 20. Jenny Wong, CPA Australia’s tax lead, advises taxpayers to take their time in gathering all necessary evidence for deductions and to wait for the Australian Taxation Office (ATO) to pre-fill certain information before submitting their returns. While financial pressures may tempt some to lodge early to receive their refunds, it’s essential to be methodical and ensure that all entitlements are claimed. Rushing can result in mistakes, such as needing to amend returns after submissions.
Wong also highlighted the common pitfall of simply copying information from the previous year’s return without considering any changes in personal circumstances. Taxpayers should be mindful of the various changes that could influence their claims, such as new work-related expenses or changes in jobs.
To avoid these pitfalls, Wong suggests avoiding a “set it and forget it” approach and instead assessing what is different in one’s financial situation this year. She advises that potential claims include expenses related to additional work travel or equipment for a new job. The ATO has guidelines available to help taxpayers understand what they can claim.
Furthermore, seeking professional advice can be beneficial, especially for those with more intricate financial situations, like rental properties or cryptocurrency. This expense can also be tax-deductible. However, taxpayers must ensure they have appropriate documentation for every claim, regardless of whether they work from home or not, to avoid exaggeration.
Wong underscores that taxpayers are ultimately responsible for the accuracy of their returns, which includes properly declaring income and claiming relevant expenses. Failure to do so not only risks less tax rebate but can also increase the likelihood of an audit by the ATO.
For a successful tax submission this year, CPA Australia emphasises several key tips:
1. Claim all out-of-pocket work-related expenses with the necessary evidence.
2. Gather receipts from various sources to substantiate claims.
3. Be mindful of work-from-home expenses, such as internet and printing costs.
4. Choose the most beneficial method for claiming work-from-home expenses.
5. Track vehicle usage carefully to justify business claims.
6. Finally, consider purchasing essential work items before the end of the financial year to take advantage of potential deductions.
By following these guidelines, you can approach tax time more confidently and potentially maximise your return.