Australians whose work expenses are significantly higher than their colleagues could find themselves in trouble with the law.
Unlike last year, the Australian Taxation Office is spending more time auditing claims thanks to an increase in working from home expenses, increasing the risk of being caught filling in dodgy returns.
With the end of the financial year is now less than a month away, H&R Block director of tax communications Mark Chapman said the tax office had computer software to catch those getting creative with their claims.
‘Self-lodgers using the ATO’s myTax program are monitored as they prepare their return by the ATO’s computer systems to ensure they’re not over-claiming,’ he told Daily Mail Australia.
Australians whose work expenses are significantly higher than other professionals could find themselves in trouble with the law. Unlike last year, the Australian Taxation Office is spending more time auditing claims, increasing the risk of being caught filling in dodgy returns
‘The ATO’s computer systems compare your claims to those of others like you and if your claim rings alarm bells, myTax will give you a stern warning inviting you to rethink that deduction.
‘Ignore that message, and you could be headed for an audit.’
Australians face a 25 per cent penalty of the tax avoided for carelessly miscalculating their claims.
A reckless error could incur a 50 per cent penalty.
Deliberate tax avoidance could see someone penalised 75 per cent of the difference between what they claimed and what they owed.
Repeat offenders face a 95 per cent penalty.
‘Don’t embellish deductions,’ Mr Chapman said.
‘You can only claim what you’ve spent.
‘So, don’t inflate deductions in order to get a bigger refund and only claim for costs you can prove you spent, by producing an invoice, receipt or bank statement for instance.’
If your deduction claims are found to be incorrect, you will be required to repay the tax avoided, plus interest.
Receipts or bank statements were sufficient proof when submitting a tax return.
The tax office is also cracking down on Australians who fail to declare their capital gains from Bitcoin or any other cryptocurrency
‘So, if you have incurred a work-related expense, and you have the paperwork to prove it, don’t hesitate to claim it,’ Mr Chapman said.
Since March 2020, the federal government has allowed professionals to claim a flat 80 cents-an-hour rate and that is continuing until the end of this financial year.
But by opting for the lower 52 cents-an-hour rate and individually adding up their home phone, internet and electricity bills, someone working from home stood to be able to claim between $2,550 and $2,700, an H&R Block analysis showed.
Those working from home would typically lose out on more than $1,000 worth of tax deductions if they opted for the government’s flat 80 cent rate.
The tax office is also cracking down on Australians who fail to declare their capital gains from Bitcoin or any other cryptocurrency.
Mr Chapman said many investors had the mistaken belief digital currency transactions weren’t traceable.
Since March 2020, the federal government has allowed professionals to claim a flat 80 cents-an-hour rate and that is continuing until the end of this financial year. Pictured is a woman working from home in Adelaide
‘The ATO is collecting data from Australian data exchanges on crypto-currency transactions, including the names of people who have bought and sold cryptocurrency during the year,’ he said.
‘They will then match this with tax returns to ensure that all income and gains have been correctly reported.
‘It is essential therefore that if you have cryptocurrency income and gains that you report them on your tax return because the belief that cryptocurrency is an anonymous hobby, with the ATO unable to trace transactions, is wrong.’