Mistakes people make to maximize their Tax return
By Advantage Property | 16th Jun 20
1. Not declaring your entire income
The Australian Tax Office says the biggest mistake someone can make is failing to declare your entire income. That means everything from your regular job, to temporary jobs you only spent two weeks in, to cash-in-hand payments all must be declared.
That even includes some things you might not recognise as income, such as money from the "sharing" economy or capital gains earnt from cryptocurrency like Bitcoin. Australians working from home have access to a new tax return shortcut.
2. Claiming deductions for things you aren't entitled to
The tax office has three golden rules for claiming deductions: it must be related to earning your income, you have to have bought it yourself (and not been reimbursed) and you have to have a record to prove it.
3. Forgetting to keep receipts
It's the curse that gets us all. Receipts are often discarded, thrown in the car or left in shopping bags forever. Where possible, it's best to have a receipt emailed to you and then printed, so you have both a soft and a hard copy. It's even easier if you use the ATO's My Deductions app, which can take photos of your deductions as you buy them.Keeping receipts can be annoying, but you must be able to prove your deductions.
4. Claiming a deduction for something you never paid for
This one is a no-brainer and comes back to the three golden rules.
To claim a work-related deduction, you must have paid for it with your own money – and you cannot claim it if your work reimburses you for your expenses.
Your occupation must require that you wear specific clothing before you can claim laundry costs.
5. Claiming personal expenses for rental properties
The ATO says if you own an investment property that is available for rent, you can only claim deductions for times when your property was rented or genuinely available for rent. Claiming the total of the property's expenses when you haven't made a genuine effort to make it available to rent will raise a red flag with the tax office.