What are the Common Tax Mistakes that people make?

Let's overview some of the most common tax mistakes that people make:

Don't listen to your mates. 

Unless your mate has some tax expertise then get some earplugs and use them.  Just because they've claimed something and got a bigger refund doesn't make it right.  The Australian Taxation Office has some pretty sophisticated Intel on you and what's right and wrong and they apply statistical inferences and cross check a whole range of income activities and expense with occupational matching.  Remember their job is to collect the taxes that pay the government bills.

Claiming home to work travel.

It's pretty rational to think that your travel to and from work is a tax deduction.  Without getting to work how could you earn your wage?  The logic is there but the courts feel otherwise.  Here is their logic.  To get a tax deduction, it must be a cost that you have incurred to earn your Income.  The point here is when do you start to earn your income?, is it when you leave the driveway at home or when you walk into the door at work?  Correct... when you walk into the door at work. Your employer isn't going to pay you for the trip to work, everyone would be different. So anything up to that point is just a normal life cost and has no relationship to your earning if income, therefore not tax deductible.

There are of course exceptions to this rule, when your work travel is more than just to and from your workplace or involves the cartage of heavy equipment.  That's for another exciting future Gotax video or Blog.

Reimbursed costs.

Claiming costs where your employer has reimbursed you is a big No No.  If you have spent money on a work expense and you get reimbursed for it then your net cost is the same as your tax deduction - zero. It might sound like a smart move because you no doubt have the receipt, but an ATO to employer phone call will sort that out pretty quickly.

Not depreciating big ticket items.

If you're buying big ticket items for your job, that is a price beyond $300, then you have to write-off the value over a few years.  You've no doubt heard of depreciation, well this is what that is.  Depending on the type of the big ticket item determines the time frame it can be written off.  So claiming all of the amount in the year you've bought it is another No No.  Have some solace in the fact that you don't lose your tax deduction, you'll end up getting all of the tax deduction, it's just spread over a few years.  So remember to keep records so you don't forget to claim in future years.

Not keeping your records.

You need to keep your receipts, diaries and logs.  Without them you have no way of proving you spent the money if you're ever looked at.  We at Gotax understand this is an enduring problem so we've created the greatest tax app around, Deduction Grabber, it'll keep your house in order and it's free, Just for you, because we care. Do it now and scan the QR code:

Not using a great Tax Agent. 

Well what can we say with this one.  We are pretty good.  So try us to find out.  And so you don't forget, it's G O T A X.