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.

Undisclosed income

Investment income

If you own shares or investment property, have you correctly included:

• rental income
• dividend income, and
• capital gains from sale of assets?

Employee related payments

If you are an executive or director, have you correctly included as income:

• benefits from overseas employee share or bonus schemes, and
• income from employee share plans?

The Tax Office has indicated that it will review tax ministrations strategies used by individuals with income over $1 million, including alienation of personal services income and the claiming of large deductions and credits.

Superannuation

Personal contributions

Have personal superannuation contributions been properly claimed? You may claim personal contribution if:

• they satisfy the maximum earnings test (ie. the 10% rule), and
• the notice of intention to deduct contributions is provided to the trustee.

Contribution caps

Have you ensured that contributions made to your superannuation are within superannuation caps?

The Tax Office will follow-up with those who have exceeded caps and raise assessments where necessary. They have also stated that they will continue to monitor taxpayers who may have illegally accessed superannuation savings before retirement (as indicated by 1,100 audits conducted during 2009-10).

For more information, or help in preparing you tax return, contact Taxwise on (08)  9248 8124.

About The Author

Warren Kruger is an Australian Tax Specialist and Advisor. For a FREE Report “7 Essential Strategies to Reduce Your Taxation NOW!”,enter your name and email address in the Opt In Box located on the top right hand side of this article.

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