CANBERRA, AAP – As people start working on their annual tax returns, the nation’s peak accounting body, CPA Australia, has warned if income is omitted the tax office will be on the case.
CPA senior manager of tax policy Elinor Kasapidis, in providing tips for employees at tax time, says most transactions where money changes hands leaves a digital footprint.
“The ATO has even greater information-gathering powers than the police,” Ms Kasapidis says.
“If you’re thinking of playing hide and seek with the ATO, don’t expect them to close their eyes and count to 10. Assume they have full line of sight on your income.”
Claiming deductions for work-related expenses is the biggest area where people go wrong, both by claiming too much or not enough, she added.
“Plenty of people miss out because they don’t know to ask,” she said.
But equally, don’t just copy and paste last year’s deductions.
The Australian Tax Office has already warned it will be taking particular note of work-related expenses because the COVID-19 pandemic has changed people’s work habits.
It will look closely at anyone with significant working-from-home expenses, especially those that that maintain or increase claims for things like car, travel or clothing expenses.
This is the first full income year to fall within the COVID environment.
Ms Kasapidis said employees who spent time working from home may be entitled to claim a deduction for expenses such as electricity and the internet.
“The ATO’s ‘shortcut method’ is suitable for many taxpayers and will save time and effort,” she said.
This allows an all-inclusive rate of 80 cents per hour for every hour people work from home, rather than needing to separately calculate costs for specific expenses.
Employees who lost their jobs or worked reduced hours may have received a mix of government allowances, salaries and redundancy payouts during the financial year.
“It may come as a surprise to many people to learn that their JobSeeker and redundancy payments are taxable,” Ms Kasapidis said.
CPA AUSTRALIA’S SIMPLE TAX RETURN PRINCIPLES:
* If you earned money, you need to report it
* If you can’t prove an expense, you can’t claim it
* If you want to make sure you’ve got it right, see a tax agent.