The Australian Taxation Office (ATO) will be focusing its efforts this year on increasing tax revenue and boosting tax knowledge across the community, says Professor Rahat Munir, head of the Department of Accounting and Corporate Governance at the Macquarie Business School.
Basics education: the Macquarie Business School tax clinic offers workshops on how to file and amend a return, how to work out depreciation and how to claim investments and dividends.
With the 2022-23 financial year now at an end, Professor Munir says having accurate tax records on hand is a key factor for fast lodging and processing of your tax return.
"We have around 13 million tax filers in Australia but basic understanding of tax in the community is very limited and it is common for people to make mistakes. But our tax system is not complex. In terms of legislation and how tax is determined, it is one of the simplest in the world,” Professor Munir says.
Here Professor Munir outlines the three most common mistakes taxpayers make and offers advice on how to avoid them.
1. Claiming incorrect expenses
The average tax refund for Australians is between $2500 and $3500.
It’s natural that people want to maximise their tax refund. As a result many people make the mistake of claiming for items they are not legally entitled to claim.
This practice escalated during the COVID period when working from home became widespread.
People working in the hybrid model of some days from home and some days from an office may incorrectly think you can split all expenses between home and the office. It’s a common mistake not have a clear knowledge of which expenses are legitimate opportunities for a tax deduction in both settings.
How to get it right
The ATO website states very clearly what can be claimed at home and it is worth a visit. The site also has very clear examples of costs in general that can be legally claimed and what is not claimable.
When it comes to working from home, there are a number of items and a percentage of your ongoing expenses you can claim. It is best to know the exact amounts you can claim when you lodge your tax so that you can receive your tax return faster.
If you’re not sure about what you can claim, you can ring the tax office hotline on 1300 720 092.
2. Inflating expenses
Another common mistake is inflating expenses.
It is not recommended to claim expenses without having receipts proving you spent money on each specific claim. The ATO conducts random audits and if claiming evidence-free or misleading expenses, you could risk an audit on your refund. If your claims are found to be false or inflated, you could face a heavy penalty. Plus you will be required to pay back any refund you received with interest.
How to get it right
Any claim you make must be directly work-related or related to income generation. Make certain you have a receipt for all your purchases but particularly for any claim above $300.
Help: Macquarie Business School Professor Rahat Munir, pictured, will run a tax clinic to assist with tax return lodgements in August 2023 at the Macquarie University Wallumattagal campus.
3. Incorrect personal details
Simple mistakes such as not providing the right bank details or incorrect personal details can impact the timing of processing your tax return and cause delays in receiving a refund. Many people lodge their return themselves through the ATO tax portal and if you have done this previously, the website will generate a pre-filled form with past information so it is wise to double-check all the stored details are still correct.
How to get it right
Go through the auto-generated lodgement information to be sure all details are correct. An incorrectly spelled name, or old bank details or a mistyped tax file number will delay a refund.
Tax clinic launched to help with the basics
To improve taxpayer knowledge and skills for lodging tax returns, Professor Munir will run a clinic in August 2023 at the Macquarie University Wallamattagal campus.
The objective of the clinic is to improve basic tax knowledge for the general public, small business people and students. The clinic will provide real case study scenarios and opportunities to practice relevant tasks using the accounting software platform Xero Tax.
The clinic covers how to file and amend a return, how to work out depreciation and how to claim investments and dividends. There will also be interactive workshops and presentations on:
· How to lodge tax returns and manage tax debt
· How to comply with tax requirements
· Provision of professional and confidential advice on tax matters
Professor Rahat Munir is the head of the Department of Accounting and Corporate Governance, Macquarie Business School.
