In our previous blog, we discussed the importance of maximising your tax returns for extra profitmaximising your tax returns for extra profit. However, you should also file them correctly with the ATO to reap the full benefits and avoid being slapped by fines. Whether you operate your business as a sole trader, a partnership or as a company, here are some general tips from the ATO to make your tax filing error-free:
Ensure correct payroll information
Unfortunately, this not only calls for correct figures to be input for every employee – throughout the year, you also need to keep up with various payroll changes deadlines such as Pay-As-You-Go (PAYG) withholding, SuperStream obligations, quarterly Super reporting and annual payment summaries, and completing reconciliation forms that contain employees’ PAYG taxes, annual taxable salaries and superannuation. Are your payroll and bookkeeping in order?
Cross-check information in pre-filled tax return forms
The ATO receives 600 million pieces of data from employers, banks, government agencies and third parties for pre-filled entries in tax return forms. As soon as you receive your form, take some time to double check fields containing pre-filled information provided by the agencies that you deal with to avoid discrepancies that can delay your return claims.
Set your facts straight
One of the details that the ATO is most keen about is whether or not you have income omissions. Declare all possible sources of income within the year such as foreign income, interest from banks and payments from the government. Other common filing mistakes include:
- Supplying an incorrect TFN
- Spelling errors in your name.
- Supplying incorrect bank account details.
- Providing your year of birth rather than your full date of birth.
- Not completing the income test and/or spouse details.
- Lodging duplicate returns for the same year.
- Incorrectly using the ‘Additional Information Schedule’.
Check out the ATO guide to deductions
Along with our guide to small business tax advantage claims, you should also check out the finer details of these claims provided by the ATO on the following deductions:
- Vehicle and travel expenses, including travel between work and home
- Clothing, laundry and dry-cleaning expenses
- Gifts and donations
- Home office expenses
- Interest, dividend and other investment income deductions
- Self-education expenses
- Tools, equipment and other assets
- Other deductions
Be aware of over-claiming
The ATO guarantees that you can receive your tax return claims provided that you can provide accurate information. On the flipside, the ATO comes down hard if businesses file for more than they should receive, especially on high work-related expense claims across occupations and industries. Thus, you should ensure transparency in your business and personal finances.
There are over 350,000 tagged by the ATO for tax return errors – don’t be one of them this year. Contact a business consulting firm that can provide you with a virtual CFO to keep your tax filing in order.
Cutcher & Neale’s myCEO Service aims to drive all aspects of a business towards achieving their vision through an internationally recognised systematic process. If you need accounting and tax advice, contact us and know exactly how we can help you.