We’ve said it before and we’ll say it again – this is going to be a tax season unlike any other (we’re looking at you, JobKeeper, working-from-home allowances, and extended asset write-off). And now that the tax returns have started flooding in, the Australian Taxation Office (ATO) has revealed the three biggest mistakes they’ve noticed so far.
Claiming multiple working from home methods
The tax office created a working from home shortcut this year in anticipation of a high number of expense claims due to the COVID-19 pandemic.
This shortcut allows taxpayers to claim a flat 80 cent per hour deduction on their working from home expenses and has now been extended to September 30.
But plenty of taxpayers claimed expenses under the shortcut, while also trying to claim items like laptops and desks separately.
“We’ve already seen some taxpayers claiming working from home expenses under multiple methods either accidentally or deliberately,” says Assistant Commissioner Karen Foat.
“It’s important to remember that if you’re claiming under the working from home shortcut method for 1 March–30 June 2020, you can’t claim any other expenses for working from home for that period.”
Copy-pasting last year’s tax deductions
While taxpayers have been increasing their deductions in areas such as working from home, many have forgotten to reduce claims in areas where their spending has been reduced, instead relying on information from their 2019 tax return.
“We know that more people have been working from home, working reduced hours or unfortunately not working at all. So, if you aren’t travelling for work, you can’t claim travel expenses. If you aren’t wearing your work uniform, you can’t claim laundry expenses,” Ms Foat said.
Forgetting to include income
An old classic, this remains the most common mistake taxpayers are running into this year.
Early lodgers are forgetting to report all their income, because while the ATO auto fills many of the fields these days, this process is typically not finalised until the end of July.
“While we try to include as much as possible, we are asking taxpayers to add any amounts that aren’t automatically included to your return. This includes cash wages, foreign-sourced income, or even gains from cryptocurrency,” Ms Foat said. “Leaving out income can delay your return, particularly when we receive those income details from third parties whilst we are processing your return. Unfortunately, we can confirm that approximately one in five people who lodged early won’t be getting their refunds in the first batches out because they didn’t take the time to include this income.”
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