Q+A: The biggest tax mistakes Australians make (and how to avoid them)
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Why should Australians avoid rushing their tax returns?
Welcome to Fearing Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Sean Aylmer. It's the start of a new financial year, and for millions of Australians, that means one thing, tax time. But if you're thinking about lodging your return as soon as possible, the Australian Taxation Office has a simple message. be careful if you do. Last year, hundreds of thousands of tax returns had to be amended because of missing income, incorrect deductions or incomplete information. Anita Challon is Assistant Commissioner at the ATO. Anita, welcome to Fear and Greed Q&A.
Thanks, Sean. Thanks for having me.
So is the message, it's not a great idea to rush to do your tax return?
look, I'd go even further and say, don't rush your tax return. The reason for that, as you've already pointed out, is we just see so many mistakes being made. And in fact, you're twice as likely to make a mistake if you lodge in the first couple of weeks of July than if you just wait a little bit longer. There's a few reasons for that.
What are the most common tax mistakes Australians make?
One is, of course, it gives you time to make sure you've got everything organized and up to date. You've got all your records in place and And the second is that the ATO uses a lot of data from third parties to pre-fill tax returns. That just means it's easier for you, right? You get in, it's all there for you. You've just got to check, make sure it's correct, add in any deductions and things like that. and away you go, it's much less likely you'll make an error. You're much less likely to miss out any income when you lodge your tax return and it avoids having to do an amendment. I don't know about you, but I only want to do my tax once.
Oh, yes, absolutely.
No one wants to do it twice.
So the data matching capability I think is quite amazing because I think five years ago, let alone 15 years ago, it just wasn't there. But it is so easy to do your tax now because most of the information is pre-filled.
Yeah, that's right. And each year we try and do a little bit more.
How does data matching simplify the tax return process?
So we do have some pretty significant data matching capability. We're adding a few more things this year, which might be of interest. So for those businesses who are waiting on that all important TPAR data or that taxable payment annual report information, If you wait even just a little smidge longer, just until the end of August, when all of those reports are done, we'll actually pre-fill your TPAR information as well, which is a huge help.
Okay, Nida, you're going to have to dumb it down for me. What's TPAR?
Yeah, so basically depending on the industry that you're in, so there's a range of different industries that rely on taxable payment reports that essentially say we've paid them this much money for contracting services. So if you're in cleaning industry, for example, construction, things like that, previously you've had to kind of bring all that information together If you lodge before those reports are done, there's a good chance you'll miss something we later find out about. So it's always been the case that you should wait for the TPAR data to be available. But now we're going that one step further and saying you can now pre-fill based on the information we already have for you. And we're hoping that that helps businesses even more to get it right when they lodge their tax returns.
What's the most common mistake and inadvertent mistake?
Yeah, there's a few things we see. I think, as I said, one of the big ones is in terms of lodging too early.
What is TPAR and why is it important for tax returns?
Big mistake. But the second one is things like just claiming maybe a little bit more than you're entitled to. I think a lot of people during tax time assume that we all have deductions to put in our tax return. In fact, for most employees, particularly people like me, a typical office worker, we don't really have a lot that we can claim. And so it might be that you hear something from your mate at a barbecue or pick up a hack somewhere where someone says, hey, did you know you can claim your travel, for example, when you go from home to work and work to home?
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Chapters
8 chapters
1
Why should Australians avoid rushing their tax returns?
0:06–1:10
2
What are the most common tax mistakes Australians make?
1:10–2:11
3
How does data matching simplify the tax return process?
2:11–3:43
4
What is TPAR and why is it important for tax returns?
3:43–5:02
5
What deductions are commonly misunderstood by taxpayers?
5:02–6:35
6
How does the ATO focus on specific tax issues each year?
6:35–8:34
7
What support does the ATO offer to small businesses?
8:34–9:38
8
What should taxpayers do if they are unsure about their tax returns?
9:38–11:01
Speakers
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