The Dangers Of Lodging Your Tax Return On Your Own
Millions of taxpayers lodging their tax returns on their own are exposing themselves to numerous traps that often prove very expensive in the long run. According to the ATO, 2.8 million taxpayers filed their tax returns online via e-tax in 2013. Of the 2.8 million taxpayers, 400,000 were contacted regarding mistakes in their returns. The returns of 9 out of 10 of those contacted were subsequently adjusted. Nonetheless, a number of local expert tax accountants in Sydney claim that there are several ways in which taxpayers can claim maximum refunds without being contacted by the ATO.
The Most Common Errors
According to the ATO?s assistant commissioner Karen Anstis, the most common errors made by taxpayers are: incorrect spelling of one?s name, incomplete filling of spouse?s details, incorrect filling of private health insurance details, incorrect bank account details and incomplete dates of birth. While the ATO issues most returns within 12 days of receiving them, the ATO issues tax returns lodged with errors after a slightly longer period.
Traps Of ATO?s Online Pre-Filling Option
The ATO?s online pre-filling option automatically adds income from the bank accounts, shares and investments held by taxpayers. While this option has several advantages a number of tax accountants warn that the information provided in it is only as good as the timing of the information being sent by employers, banks, Centrelink and other organisations to the Tax Office.
A good example is if a taxpayer relies on pre-filling information as the source of their income information to complete their tax return and the information is not 100% accurate, the taxpayer is open to an audit and could be required to pay back their tax refund and also charged interest on the money they have incorrectly received. Taxpayers who use online pre-filling should cross check their own records at least until the end of August, before the deadline for receiving pre-filling information passes.
A number of local tax accountants in Sydney, suggest that taxpayers make simple mistakes like incorrectly computing and lodging capital gains tax amounts, filling their returns after the deadline has passed, incorrectly claiming travel expenses between home and work and incorrectly claiming the purchase of work clothes that do not have the required logos. The ATO can charge anywhere between 20 per cent and 100 per cent of the tax avoided, depending on the severity of what the error is and make the tax payer pay back the tax and interest on the money owed, which can leave you out of pocket much more than intended.
Not Claiming Enough
Another mistake taxpayers make is they do not claim enough tax refunds because they are concerned about being audited. With the right tax accountant you should be able to claim every dollar you are legally entitled to. The ATO can’t fine you if you’ve claimed everything you legally should.
Small Mistakes, Big Problems
Even the smallest mistakes like calculation errors, transposing figures or getting decimal points wrong can accumaulte to bigger problems. Many reputible tax accountants suggest that taxpayers who claim too much can attract an ATO audit.
Whether you do your own tax lodgement or hire a professional, make sure check everything you claim. Using a well trained and knowledgable tax accountant can reduce all of the above risks. DIY tax lodgers be wary.
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