Latest News

Hot Issues
spacer
Fringe Benefits Tax (FBT): employees’ private use of vehicles
spacer
ATO to contact clients over bank details
spacer
ATO claws back $850m in unpaid SG in FY 17-18
spacer
Appetite for property in SMSFs shows signs of life despite tough market
spacer
Superannuation gender gap narrowing, research shows
spacer
Identification numbers for directors
spacer
How financial advice helps create wealth.
spacer
Australia's vital statistics
spacer
Unlocking equity crowdfunding in Australia
spacer
$20m boost for SME clients looking to exporting
spacer
Work-Related Expenses
spacer
ATO updates crypto guidance
spacer
ATO zones in on hundreds of newly created reserves
spacer
Senate passes $20,000 instant asset write-off extension
spacer
Victorian Vacant Property Tax
spacer
Director Penalty Notices
spacer
ATO set to pounce on undisclosed income streams
spacer
In case you missed it – The company tax Bill that did pass Parliament.
spacer
GST spotlight headed to smaller end of town
spacer
Superannuation Amnesty – Maybe! Maybe Not!
spacer
ATO drills in car-sharing focus this tax time
spacer
What is Bankruptcy?
spacer
Update of Australia's vital statistics
spacer
ATO speaks on risk factors, surveillance triggers for FY19
spacer
ATO’s corporate residency guidance cops backlash
spacer
ATO dispels top tax time myths to clients as clampdown rolls out
spacer
Tools for budgeting, cash flow, Super and more ….
spacer
Guidance for SMSFs on transfer balance reporting
Article archive
spacer
Quarter 3 July - September 2018
spacer
Quarter 2 April - June 2018
spacer
Quarter 1 January - March 2018
spacer
Quarter 4 October - December 2017
spacer
Quarter 3 July - September 2017
spacer
Quarter 2 April - June 2017
spacer
Quarter 1 January - March 2017
spacer
Quarter 4 October - December 2016
spacer
Quarter 3 July - September 2016
spacer
Quarter 2 April - June 2016
spacer
Quarter 1 January - March 2016
spacer
Quarter 4 October - December 2015
spacer
Quarter 3 July - September 2015
spacer
Quarter 2 April - June 2015
spacer
Quarter 1 January - March 2015
spacer
Quarter 4 October - December 2014
ATO dispels top tax time myths to clients as clampdown rolls out

Ahead of one of its biggest deductions crackdowns, the tax office has released a series of common mistakes and misunderstandings taxpayers make at tax time.

       

 

The ATO has identified the top 10 tax myths and misunderstandings it says are causing incorrect claims, off the back of its landmark individuals not in business tax gap report, which purported that 78 per cent of agent-prepared returns required adjustments, contributing to an $8.7-billion tax gap.

Accordingly, one of the myths encountered by the ATO is that tax agents will take responsibility for their clients’ claims.

“Whether you prepare your own return or you use an agent, you are ultimately responsible for ensuring your claims are correct,” ATO assistant commissioner Kath Anderson told taxpayers.

“Even if you use a tax agent, you are ultimately responsible for ensuring the information in your return, including the deductions you claim, is correct. You cannot transfer that responsibility to your agent so make sure you give them complete and accurate information.”

H&R Block director of tax communication Mark Chapman had earlier told Accountants Daily that the ATO needed to adjust its messaging to ensure they were not placing all tax agents in the same basket of ‘bad eggs’.

“The ATO knows the vast majority of tax agents are reliable and low risk and that has not come through in the messaging they’ve put out and I think that messaging needs to be rebalanced.”

Likewise, Change Accountants & Advisors managing director Timothy Munro believes the ATO should reconsider its approach before it risks damaging the reputation of the entire industry.

“Why would the ATO want to come out and denigrate a group of people that's working its hardest on its own behalf,” Mr Munro said.

“The ATO in doing that, will alienate accountants, make them upset and it goes towards ruining the trust that clients have with accountants.”

Top myths

Top of the list is the myth that everyone is entitled to claim a “standard deduction” of $150 for laundry, 5,000 kilometres for cars or $300 for work-related expenses.

“While you don’t need receipts for claims under $300 for work related expenses, $150 for laundry and 5000 kilometres, you still must have spent the money, it must be related to earning your income, and you must be able to explain how you calculated your claim,” said the ATO.

Another popular myth is that bank or credit card statements can be used in place of a receipt , but are unfortunately insufficient in providing enough detail to support the claim.

According to Ms Anderson, some items are claimable for a small number of taxpayers but it’s a myth that the majority can claim.

“There are only a handful of taxpayers with special circumstances who can claim things like gym memberships or makeup containing sunscreen. For most, there isn’t a link to earning their income,” she said.

With more people working from home, Ms Anderson says the ATO is becoming concerned about taxpayers claiming their entire Foxtel or Netflix subscriptions, or their whole phone bill, on the basis that some part relates to earning their income.

Other myths in the top 10 include believing you can claim normal home to work trips; that you can claim plain clothes you wear to work, or claiming hair, clothes and makeup because you have to look good at events; or claiming all holiday travel expenses when only a few days are in relation to a conference or work.

This time last year, mid-tiers like Moore Stephens and HLB Mann Judd shared common client misconceptions to watch out for. You can read more about them here.

 

Jotham Lian
31 July 2018
www.accountantsdaily.com.au

© O'Brien and Partners 2011 - All Rights Reserved | 91 Station Street, Malvern VIC 3144 | Tel: 03 9509 3911 | Fax: 03 9509 3922