Taxday is always just around the corner, and it seems to approach even more quickly when you're not prepared. If you shake in your boots when you think of submitting your tax return to the ATO, it could be that you're not aware of all the rules and regulations, or you might be prone to making some of the more common mistakes. To help you to sleep a little better at night, what are some of the biggest pitfalls you should avoid?
Try Not to Stand Out
Do you consider yourself to be a "Mr. or Mrs. Average?" As far as the tax authorities are concerned, the more that you fit in, the better. This is because they have a great amount of data related to people who are just like you who work in identical occupations. The technology allows them to compare your data to that of the average person, to determine if you are "normal." Computer programs have been written that automatically throw up a red flag against your return, if it looks out of place.
Relying on Guesswork?
Never guesstimate the figures that you use on your tax return, as it's relatively easy for the tax authorities to check your submissions against records of tax you may already have paid. Most people earn a regular salary or wage, and much of this information is also submitted by your employer, so it's easy to check.
Overseas Income and Property
Have you forgotten about your overseas income? Many Australians own property in foreign lands and are liable to pay tax on any income earned there. This will include business income, investment gains or benefits you receive based on your assets.
You will also need to make proper calculations if you use a property overseas for family holidays. Strict rules are in place to cover the situation, and you must make the property available for others to rent when you're not there, or you won't be able to claim deductions against your tax return. Keep very clear records to show how often you rent the property out and adjust any claims you may make, so that they mirror those weeks only.
Many people are afraid of paperwork and don't know how to file expenses and receipts. It's not that difficult these days, and you can scan any of these documents into digital files to make it a whole lot easier. The ATO may ask you to furnish some of this data to back up any claims that you make. Get into the habit of filing properly, or you may find you have to pay interest and penalties.
Focusing on the Task
To be sure that you do everything properly and to try and avoid any audits, get in touch with an accountant to help you with your next tax return.