Thanks to increased financial pressure from COVID-19, many taxpayers are sweating on using their refund for daily costs.
But rushing through your return – or relying on age-old myths your neighbour’s brother’s tax agent said 10 years ago – leads many to filling out their return incorrectly.
At best, this will slow down your tax return, and at worst you could face financial penalties for attempting tax fraud.
Here’s six common myths and traps the ATO believes will catch out some taxpayers this return season:
Lodging as fast as possible does not mean your refund comes back quicker
But lodging your tax today – particularly if you are relying on your employer to provide your income to the tax office – could actually slow your return down.
“Each year the ATO automatically includes information from employers, banks, private health insurers (and this year JobKeeper for employees and JobSeeker amounts) in people’s returns,” the ATO advises.
“For most people this information is ready by the end of July.”
Claiming work from home costs? Beware of ‘double dipping’
Thousands of Australians will be claiming working from home costs – such as cooling, electricity and internet – for the first time due to COVID-19.
But the ATO has warned that the 80 cent covers everything – including home office equipment – so some taxpayers might find themselves ‘double dipping’.
“We are concerned that some taxpayers may either accidentally or deliberately double dip by claiming their working from home expenses using the all-inclusive shortcut method while also claiming for specific items such as laptops or desks,” Assistant Commissioner Karen Foat said.
“It’s important to remember that if you’re claiming under the shortcut method, you cannot claim a separate additional deduction for any expenses you incur as a result of working from home.”
Update your bank details – or at least check them
Rushing the clock to get your tax filed on time? Make sure your bank details are up to date.
At the very least, check that your bank account numbers match up with what the ATO has on file.
Bank details don’t update automatically, and the ATO only has what you nominated last year.
You cannot claim travel from home to work
This is an age-old trap that has been catching taxpayers out since the dawn of tax.
You cannot (generally – like all things there are exemptions) claim the cost of driving or catching public transport to work.
“If you are working from home due to COVID-19, but need to travel to your regular office sometimes, you still cannot claim the cost of travel from home to work as these are still private expenses,” Ms Foat warns.
“Even though you are working from home, your home is still a private residence – it is not a ‘place of business’.”
You need proof of your expenses – if they cost below $300
There’s a recurring mindset among some taxpayers that because work-related expenses below $300 are refunded instantly, everyone can claim $299 without raising red flags.
“We often see people claiming a deduction despite not purchasing anything. When we question them, we often find it’s because they thought everyone is entitled to claim $300,” Ms Foat advises.
“While you don’t need receipts for claims of expenses up to $300 but you must have actually spent the money and be able to show us how you worked out your claim.”
Your work expenses need to be directly related to your work
It sounds straightforward, but the liberties of what is needed for work are stretched by some taxpayers who will attempt to claim daily living costs as part of their income.
“For example, people who are working from home can’t claim these items and so a high work from home claim together with a large claim for protective items may trigger a red flag and slow down your return,” Ms Foat said.
“People also cannot claim for the costs of setting their children up for home schooling. These costs are private expenses.”
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