As Australians prepare to lodge their tax returns with the Australian Taxation Office (ATO) in the coming weeks, many are looking forward to a potential cash boost. However, experts warn that individuals should thoroughly review their claims to avoid missing out on significant deductions—an average of $525.50, according to recent research by H&R Block.
Many taxpayers, especially those using the ATO’s MyTax portal, may be unaware of the deductions they can claim. A staggering 66% of those who file their own returns have reportedly overlooked eligible deductions. Mark Chapman, H&R Block’s director of tax communications, emphasises that with budgets tightening, leaving money behind is not an option.
The complexities of tax returns have increased—especially for individuals starting side hustles, investing in shares, or buying property. As the ATO does not inform taxpayers of their entitlements, it’s essential for Australians to navigate their tax returns carefully to maximise their claims.
Surveys reveal that one in three Australians only realise they’ve missed claims after they’ve submitted their returns, resulting in missed opportunities for the financial year. Consequently, it is advisable to delay submissions immediately after the financial year ends on July 1 to minimise mistakes. Waiting allows the ATO to gather pertinent information on salaries, bank interest, and other factors, which are then pre-filled in the myTax system, facilitating a more accurate tax return.
In the previous year, approximately three million individual tax returns were lodged by July 23, soaring to 5.8 million by August 20. Common claims predominantly relate to car expenses and clothing, with car claims totalling $10.3 billion from 3.6 million people and clothing expenses reaching $2.2 billion from 6.5 million claimants.
Despite the prevalence of deductions, many taxpayers neglect to claim their full entitlements, potentially costing them hundreds or even thousands of dollars. Noteworthy but often overlooked deductions include:
- Work-related education expenses: Short courses, workshops, online learning, and seminar fees.
- Work from home expenses: The actual cost method can offer higher deductions compared to the fixed-rate method.
- Income protection insurance: Premiums paid outside of superannuation funds are deductible.
- Investment-related expenses: Deductions may include loan interest for investments, property management fees, financial advisory fees, and brokerage costs.
- Professional memberships and subscriptions: Deductions can apply to industry memberships and relevant tools or software subscriptions.
Other common oversights involve rental property expenses such as gardening and pest control, as well as additional concessional superannuation contributions. Taxpayers who engaged a tax professional for the previous year’s return can also claim these costs in the current year.
For more detailed guidance on what can and cannot be claimed, the ATO provides specific occupational guides that can be invaluable.
In conclusion, as tax time approaches, it’s imperative for Australians to maximise their claims and ensure they receive their full entitlements. With careful consideration, individuals can potentially boost their tax returns significantly, making this financial year a little easier to navigate.
