by Warren Kruger on August 12, 2010
According to the Tax Office, there are 12.6 million individual taxpayes of which 72% lodge a return through a tax agent. Here are some common mistakes made by many occupation groups.
Work-related deductions
- Do you have appropriate documentation to support motor vehicle and trave expenses?
For example, have you maintained a travel diary to support travel which is six days or more? Has a correctly compiled log book been kept where the ‘log book method’ has been used to claim related car expenses?
- Have you correctly claimed travel expenses or motor vehicle expenses where you are required to travel from home to work more than once a day?
- Do you satisfy the relevant conditions in order to claim a tax deduction for motor vehicle expenses where you have been carrying bulky equipment?
Note: In most case, travel between work and home multiple times during the day and the transportation of bulky equipment would generally result in a deduction being available where the travel is fundamentally part of the employee’s work and the employee has no fixed place of employment.
- Have you considered the rules with respect to claiming home office, mobile phone and internet expenses?
For example, mobile phone expenses will need to be apportioned with regard to the itemised account, detailing work and non-work related calls against total cost (even if the fees are capped). If you are claiming home office expenses, has a distinction been drawn between a home office which is merely used as a convenient location to carry out particular duties and a home office which would be considered a place of business?
Taxwise has prepared a number of mini-series’ to help you understand what you are entitled to claim. Click to follow the link if you are an engineer, nurse, teacher, mechanic, hairdresser or defence force member.
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The following letter, titled Tax time processing and refunds provides you with the latest information about current ATO processing.
10 August 2010
Dear tax practitioners
Tax time 2010 processing and refunds for your clients
On the 28 June 2010 the Commissioner wrote to you seeking your assistance in managing your clients’ expectations on the processing of their income tax return, in the lead up to this year’s tax time.
As is normally the case the ATO aims to process income tax returns in a way that balances the need to achieve good service standards for taxpayers while maintaining the integrity of our tax and superannuation systems.
It has been raised with me that there is concern that some of your clients have yet to receive their refunds, despite you having lodged their 2010 income tax return with the ATO in July.
I can confirm that while there have been a significant number and amount of refunds issued, there does remain a number of returns still going through our processing and verification actions. This is normal during this period every financial year. It should be remembered these verifications may be for a variety of reasons.
While our processing times are often shorter than our published service standards, it is important that tax agents and taxpayers do not rely on any expectation for processing of electronically filed returns in less than 14 days. This is particularly important for agents who use taxpayers’ refunds as payment for their fees.
Up to 29 July 2010, the ATO had issued more than 1.25 million notices of assessment, including just over 1.04 million refunds. By Friday 6 August, we had finalised a further 800,000 assessments, the vast majority resulted in electronic funds transfer (EFT) payments. As these refunds issue this week, the ATO will have paid out over $4 billion in
refunds and issued some 1.9 million refunds since 9 July 2010.
As is the case every year, we could not begin processing returns straight away, because we had to test the new software installed for the 2010-2011 year. This happens every year because it is necessary to install new software for any changes in the tax laws. This year, we did not begin processing income tax returns until 9 July 2010. If you lodged
your return prior to this date, processing would have been delayed.
As previously advised, up until 23 July 2010, there had been delays with the processing of returns for taxpayers who have Higher Education Loan Program (HELP) and Student Financial Supplement Scheme (SFSS) obligations. We needed to carry out extended testing of the accuracy of assessments for these returns. Processing of these returns
commenced on 23 July 2010, therefore, if you filed a return before 23 July 2010 and you had a HELP or SFSS obligation, your assessment would take longer to complete.
During the week commencing 2 August 2010, we had more returns on hand than we were able to process. While refunds were issued most days, with some catch up processing, we were able to finalise an additional 800,000 assessments by Friday 6 August 2010. The majority of these refunds are now available in bank accounts or on their way via Australia Post.
Overall, the regular flow of assessments and refunds has not been as consistent during our first four weeks of processing as we would have liked and we are taking steps to smooth out these fluctuations.
This letter may assist you to advise your clients of the current situation.
We apologise for any inconvenience these delays may have caused to you and your clients.
Yours sincerely
James O’Halloran
Deputy Commissioner
