Claiming Deductions on your Tax Return
As we are approaching fast towards the end of the financial year the income tax returns will be due for lodgements very soon. Historically ATO audits were targeted at big business but this has now changed. Now, individuals, business and self-managed superannuation funds are at a high risk of being selected for an audit as the ATO is now using real time data to compare taxpayers with others in similar occupations and income brackets. Their automated systems will now automatically identify and flag tax returns with higher than expected claims related to expenses including vehicle, travel, internet, mobile phone and self-education.
Below are few tips that you can use when determining your deductions:
- The expense must be incurred in gaining or producing assessable income.
- You must keep all records and be able to substantiate your claims.
- The taxpayers must have incurred the expense themselves – and not have been reimbursed.
- Having a uniform does not automatically mean you are eligible for a deduction, there should be a strong nexus to the income earning activity for the clothing to be deductible.
- There is no standard deduction of 5000 kilometres. The taxpayer should have actually travelled in course of producing assessable income and it excludes travelling form home to work.
- Always consider getting an audit insurance which will cover the taxpayer for the cost of responding to the tax audit or government compliance investigation.
To know more about what deductions are you eligible to and how to get audit insurance, please do not hesitate to speak to the advisors at Cordner Advisory. You can contact us on (07) 5504 5700 and we can discuss with you further.