7 actions to avoid when lodging your individual tax return

TaxAccounting

20 July 2021

While we all want to make the most of our annual tax return, none of us want the attention of the Australian Tax Office (ATO).

As the ATO makes extensive use of data matching to identify incorrect claims made by individual taxpayers in their tax returns, we’ve listed seven of the most common actions individual taxpayers take that might attract unwanted attention from the ATO.

1. Making unusually high claims for work related expenses for clothing, cars or laundry when compared to the claims of other individuals in similar industries.

2. Claiming the standard deduction of $150 for laundry, 5,000 kilometres for cars or $300 for work-related expenses without:

a) Actually spending the money.
b) Earning income directly related to the expense.
c) Sufficient records to evidence how the claim was calculated.

3. Working in the cash economy, working more than one job or making capital gains on cryptocurrency.

4. Deriving undeclared foreign income from overseas pensions, employment, investments, business income or capital gains on overseas assets.

5. Incurring significant rental expenses that are more than rental income received on an investment property.

6. Having undeclared capital gains from the share market or from the sale of property.

7. Not lodging your tax return on time.

Working with an accountant can help you avoid mistakes when lodging your tax return as well provide you with opportunities to maximise the return available to you. For help with your individual tax return, please speak to your adviser or contact the Findex Tax Advisory team today.

Author: Roelof van der Merwe

Roelof is the National Tax Director of Findex and has more than 15 years' experience in Australia delivering practical tax and consulting services. Roelof joined Findex after gaining experience in Big 4 and mid-tier firms. Roelof helps to ensure that Findex stays up-to-date with the latest developments by interpreting technical tax information in a practical and relevant manner. He has experience on a wide variety of complex tax related topics and has the ability to identify, understand and clearly communicate how the tax law may impact business transactions and taxpayers.