There’s no doubt that 2020 has been difficult.
However, organising your tax return appointment in July may not give you with the benefits you’re after.
In some cases, rushing in to lodge early (because you’re expecting a tax refund), can become a hindrance for you rather than an advantage.
As adapted from Tax & Super Australia’s article, today we’re going to be sharing and busting 5 Tax Myths that people have when it comes to lodging their tax returns.
Tax Myth #1. Lodging early means getting access to your refund sooner
Although in many areas of our lives, the “early birds gets the worm”, this is not typically the case when it comes to receiving your tax refund.
Booking your tax appointment early in July with hopes that you will gain access to your refund asap, does not automatically put you ahead of people who book in August.
Here’s why…
- A lot of the third-party information we need to complete and lodge your tax return (eg. Interest & Dividends) is not available until late July or mid-August.
- Also, your income statement needs to be finalised and confirmed by your employer before we can lodge.
This means that instead of being able to lodge right away, your accountant will need to wait until they gain access to this information.
Additionally, returns which are later discovered to be missing information, will need to be amended causing additional delays on the processing of your refund.
According to Assistant Commissioner, Karen Foat,
“Last year, nearly 500,000 individual tax returns were amended, with some taxpayers even amending their own returns before they were processed”.
Therefore, despite the “early bird” expectation of clients, there are advantages of waiting until August & September to lodge your Tax Return.
To book your appointment, give us a call on (03)9762 7344. NOTE: We are also offering phone appointments.
Tax Myth #2. There will be the ability to double dip this year
If you’re thinking of double dipping this year, think again.
The ATO are very aware of taxpayers accidentally or deliberately “double dipping” in their tax returns.
They suspect that some people will try to claim working from home expenses using the all-inclusive shortcut method AND making claims for specific items such as laptops or desks as separate deduction.
It’s important to remember that if you’re planning to claim working from home expenses under the shortcut method, you CANNOT claim a separate additional deduction for any expenses incurred as a result of working from home.
Tax Myth #3. Home to work travel is claimable
If you have previously claimed “work travel” expenses in your tax return but are now working from home, you may not be able to claim travel expenses to the same degree.
According to Karen Foat,
“If you are working from home due to COVID-19, but need to travel to your regular office sometimes, you still cannot claim the cost of travel from home to work as these are still private expenses. Even though you are working from home, your home is still a private residence – it is not a ‘place of business’.”
Generally, most people cannot claim the cost of travelling from home to work.
This is unless they are required by an employer to transport bulky tools or equipment and there is not a safe place to store these at the workplace.
Tax Myth #4. You’re entitled to claim the $300 threshold if you don’t have any expenses
Simply, No.
We have had some clients ask to claim deductions for expenses they’ve never purchased. But doing this, will only put you at risk by increasing your likelihood of being audited by the ATO.
Although this was once done back in the day, in the 20th Century this just isn’t accepted anymore.
While you won’t need receipts for claims of expenses up to $300, you must be able to show that you have actually spent the money and justify your calculations.
Tax Myth #5. You can claim personal expenses as work-related expenses
Each year the ATO finds taxpayers trying to claim personal expenses under the disguise of work-related expenses.
They expect nothing different to happen this year, especially given the widespread impacts of COVID-19.
The ATO have reminded taxpayers that if their jobs require close proximity to customers or physical contact, and they had to buy their own hand sanitizer, gloves or masks for use at work, they can claim these in their tax return.
BUT, for people in jobs which don’t require close proximity, or people who have purchased these items for general use, they cannot claim these items in their tax returns.
You can also not claim costs associated with home-schooling either.
We hope that this article has helped to address and bust 5 common tax myths that exist when it comes to lodging your tax return.
As we have mentioned, organising your tax appointments in August or September can have it’s advantages, compared to booking in for July.
If you haven’t scheduled your appointment yet, and would like to, ensure to give us a call on: (03) 9762 7344.