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
Hot Issues
- FBT Reminder – Odometer Reading
- ATO’s debts on hold campaign prompts new IGTO guidance
- A comprehensive collection of small business benchmarks
- The 2025 Financial Year tax & super changes you need to know!
- Underperforming employees: When can you terminate?
- A comprehensive list of guides to industry specific tax deductions.
- ‘Renewed concerns’ about economy sees consumer sentiment dip: Westpac
- Oldest Buildings in the World.
- Small businesses may ‘collapse under strain of payday super’, IPA warns
- ATO’s hands tied with scrapping on-hold debts, expert says
- What Drives Your Business Growth and Profits?
- Australian Taxation Office (ATO) shifting to firmer debt collection activity
- Why employee v contractor comes down to fine print
- Sharing economy reporting regime for platform operators
- Countries producing the most solar power by gigawatt hours
- Illegal access nets $637 million
- Accessing superannuation benefits.
- Does your business have a company Power of Attorney?
- Labor tweaks stage 3 tax cuts to make room for ‘middle Australia’
- GrantConnect
- 2 in 3 SMEs benefit from instant asset write-off, survey reveals
- Updated guidance on R&D claims
- Do you know how to recover debts?
- Wheat Production by Country
- Types of small business benchmarks
- Vimeo test
Article archive
- January - March 2024
- October - December 2023
- July - September 2023
- April - June 2023
- January - March 2023
- October - December 2022
- July - September 2022
- April - June 2022
- January - March 2022
- October - December 2021
- July - September 2021
- April - June 2021
- January - March 2021
- October - December 2020
- July - September 2020
- April - June 2020
- January - March 2020
- October - December 2019
- July - September 2019
- April - June 2019
- January - March 2019
- October - December 2018
- July - September 2018
- April - June 2018
- January - March 2018
- October - December 2017
- July - September 2017
- April - June 2017
- January - March 2017
- October - December 2016
- July - September 2016
- April - June 2016
- January - March 2016
- October - December 2015
- July - September 2015
- April - June 2015
- January - March 2015
- October - December 2014
July - September 2018 archive
- In case you missed it – The company tax Bill that did pass Parliament.
- GST spotlight headed to smaller end of town
- Superannuation Amnesty – Maybe! Maybe Not!
- ATO drills in car-sharing focus this tax time
- What is Bankruptcy?
- Update of Australia's vital statistics
- ATO speaks on risk factors, surveillance triggers for FY19
- ATO’s corporate residency guidance cops backlash
- ATO dispels top tax time myths to clients as clampdown rolls out
- Tools for budgeting, cash flow, Super and more ….
- Guidance for SMSFs on transfer balance reporting
- ATO issues alert on super, tax scams
- Salary sacrifice integrity
- Understanding the evolution of blockchain and cryptocurrencies
- Update to Australia's vital statistics
- Tax Time Checklists- Individual, Company, Trust, Partnership and Super Funds
- SMSFs - Our 'hardest' jobs
- Tax Office reveals adventurous, dubious claims ahead of tax time
- ATO reveals top tax time mistakes, set to contact 1 million taxpayers
- Watch out for charges with incoming GST laws.
- Super savings gap for women stuck at 30%
- ‘Wipe the slate clean’: Clients, accountants urged to use new amnesty period
- Statistics for all Australians
What our clients say about us