In case you hadn’t noticed, it’s tax time! Everyone is scrambling to get their returns in early to access their tax refund as soon as possible. And whilst it is possible to DIY your individual income tax return, it is worth doing some research and understanding what you can and can’t claim. Or even better, engage a professional to help you!
This year, more than ever, the ATO are keeping a close eye on the deductions that you claim. Last year, you just needed to insert an amount at the relevant item in the income tax return for your deduction/s, however, this year, you must insert a description of your claim. Quite simply, the ATO wants to know exactly what you are claiming at each deduction item, and you can rest assured they are paying attention.
Recently in an interview with ABC News, Assistant Tax Commissioner Karen Foat, noted that they do “see a whole host of weird and wonderful claims”. In 2017, almost 700,000 taxpayers claimed about $2 billion of “other” expenses including non-allowable items such as a $58,000 wedding, $20,000 for ‘raising twins’, dental costs, child care, gambling losses, beer and a Lego Set. Not surprisingly then, Ms Foat went onto say “It is concerning to us that 88% of them [the 700,000 claims] needed to be adjusted.” And “If people overclaim – even just by a little bit – it all adds up. The ATO can’t turn a blind eye to it”.
In the modern day of computer technology that can sort data quickly and efficiently, it is easy for the ATO to identify “red flags” in the form of unusually high deductions based on your occupation or even on your post code. These red flags, will lead to delays in processing your return and ultimately to receiving your refund.
If you have made a genuine mistake, the ATO would simply disallow the claim. However, if the ATO believes you have deliberately made a dishonest claim, particularly for a large sum, they will disallow the claim and may impose a penalty. Penalties can be anywhere between 25 and 75% of the shortfall amount.
The best way to ensure you maximise your refund and claim all the deductions you are entitled to is to engage a professional tax agent. At UHY Haines Norton we have decades of experience and are here to help you this tax season. We even offer a discount for early lodgers, call us today on 49721300 to book your appointment.