Tax Time Myths
ATO dispels top tax time myths to taxpayers
Ahead of one of its biggest deductions crackdowns, the tax office has listed the top myths and misunderstandings that are causing mistakes and misunderstandings by taxpayers at tax time.
Here they are:
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.
The ATO say that 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,” the ATO said.
With more people working from home, 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 top myths 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.
Further details can be found at the ATO website (https://www.ato.gov.au/Media-centre/Media-releases/Do-not-be-a-dummy-with-your-deductions/)
Contact us if you are not sure on what you can and can’t claim this tax time. Gone are the days where taxpayers can rely on myths to finish their tax returns as the ATO are increasing their scrutiny and will most likely catch up with you.