At school we were taught mistake are ok as long as we learnt from them. I somehow think the Tax Office doesn’t agrees with this statement.
Get on the wrong side of the ATO and you can experience the wrath of powers to be.
If you are like the norm and don’t like paying the tax man any extra then you have to, part of your strategy should be to get it 100% right, this can save you from fines and penalty interest.
The 5 most common mistakes are listed below:-
1. Forgotten Income such as bank interest, share dividends and trust distributions. As the ATO receives this information from the financial institutions directly, if you forget these, be prepared for a letter and tax bill from the ATO adjusting this amount for you. Handy hint: your bank totals the interest earned for you on your June statement. Put this statement from each bank with your tax work.
2. Rental property income and deductions – every year the ATO releases that it has investment properties on its radar. So it is no surprise that you need to be diligent with your tax deductions for your rental properties. Things high on the whoops list, are repairs that are actually capital expenditure, so not deductible until you sell, borrowing expenses written off & depreciation incorrectly calculated. Handy hit: keep a excel spreadsheet of the property income and expenses as they occur and file the receipts away to save any mistakes.
3. Medicare levy surcharge – just having private health insurance does not mean you are automatically exempt from paying the extra 1.5%. Ancillary cover does not cover you from the surcharge. Handy hit: take your statement to your accountant each year to determine if you have appropriate cover and are entitled to a refund.
4. Home office expenses – claiming home office expenses as an office can lead to issues when you decide to sell your house. You may be subject to capital gains tax. Handy Hit: follow your accountants advice on the amount you can claim.
5. No preparation & Doing it yourself – like everything preparation is the key. Don’t leave sorting and collecting your receipts to the last minute. Start early in the year. We developed a free Tax App for apple & android to help you keep track and calculate your refund. Just search Callaughan Partners in ITunes.
Paying close attention to these mistakes will help you stay off the ATO’s radar and prepare for this tax year.
