ATO busts tax time 2020 myths
Ringing in the new financial year, the Australian Taxation Office has warned of the common tax-time myths, which last year saw up to half a million individual tax returns amended, with some taxpayers even amending their own returns before they were processed.
In an effort to make this tax time as smooth as possible, Assistant Commissioner Karen Foat has asked taxpayers to stay vigilant and avoid being tripped up by tax-time myths that slow down returns.
“Every year, we see people tripped up by tax-time myths. Unfortunately, this often results in slowing their return down when either they or we realise their mistake as the return is processed,” Ms Foat said.
“Where it doesn’t delay the initial return, it can result in a surprise tax bill later on.”
But while there are always a range of myths that need busting around tax time, the changed circumstances this year have seen some new additions to the list.
“Our main priority is to help people get the facts straight before they lodge so that it’s a smooth, easy and fast process,” Ms Foat said.
As such, the ATO has issued an updated list of get-rich-quick schemes to beware of.
While the ATO receives information from banks, this doesn’t extend to updating details for the bank account taxpayers nominate to have their refund deposited into. Last year, many people, in their rush to lodge early, forgot to update bank details and delayed their refund, the ATO has warned.
It’s not OK to double dip
The ATO has once again warned of doubling dipping, especially on the back of the coroanvirus changes to working conditions.
“We are concerned that some taxpayers may either accidentally or deliberately double dip by claiming their working-from-home expenses using the all-inclusive shortcut method while also claiming for specific items such as laptops or desks,” Ms Foat said.
“It’s important to remember that if you’re claiming under the shortcut method, you cannot claim a separate additional deduction for any expenses you incur as a result of working from home.”
Home to work travel is not claimable
Generally, most people cannot claim the cost of travelling from home to work unless they are required by their employer to transport bulky tools or equipment and there is not a safe place to store these at the workplace.
“If you are working from home due to COVID-19, but need to travel to your regular office sometimes, you still cannot claim the cost of travel from home to work as these are still private expenses.
"Even though you are working from home, your home is still a private residence — it is not a ‘place of business’,” Ms Foat said.
‘Taxpayers can’t just claim $300 or $299 if they had no expenses’
The ATO noted it often sees people claiming a deduction despite not purchasing anything. This often comes down to a false belief that everyone is entitled to claim $300.
“While you don’t need receipts for claims of expenses up to $300, you must have actually spent the money and be able to show us how you worked out your claim.”
Work-related expenses need to be work related
Each year, the ATO sees people trying to claim personal expenses under the guise of work-related expenses.
This year, it is warning taxpayers that they can only claim for expenses that are directly related to earning their income.
“We have been reminding taxpayers recently that if they are in jobs that require physical contact or close proximity to customers and they had to buy their own hand sanitiser, gloves or masks for use at work, that they can claim these items,” Ms Foat said.
However, the ATO has explained that people who aren’t in jobs that aren’t in close proximity to the public, or people who have purchased these items for their general use, cannot claim them.
“For example, people who are working from home can’t claim these items and so a high work-from-home claim together with a large claim for protective items may trigger a red flag and slow down your return,” Ms Foat said.
People are also being reminded they cannot claim for the costs of setting their children up for home schooling.
"These costs are private expenses,” Ms Foat reminded.
Lodging earlier doesn’t always mean getting your refund earlier
Each year, the ATO automatically includes information from employers, banks, private health insurers - and this year JobKeeper for employees and JobSeeker amounts - in people’s returns. For most people, this information is ready by the end of July.
Since leaving out income can slow returns, taxpayers that are lodging before the ATO has prefilled this information are being reminded to ensure they include all of the necessary information before they submit.
Lastly, the ATO has reminded taxpayers that tax returns lodged electronically are usually processed in less that two weeks. Taxpayers are also being told they can check the progress of their return by logging on to myGov and clicking through to the ATO.
Maja Garaca Djurdjevic
01 July 2020