It’s time to do your individual Australian tax return and Refund Express is here to make it quick and easy by doing your Tax Return online. As daunting as that sounds, it is a good thing you have us at Refund Express to help. Obviously, we want you to get the biggest possible refund you can get, however this being said we can’t just give it to you and we certainly don’t want to give the Tax Man a tip.
Over eight million Australians claim work related expenses every tax season, Assistant Commissioner Graham Whyte wants to remind people to claim their deductions correctly this financial year. Dodgy deductions are everyone’s worst nightmare. For accountants because we’re the ones who hear from the ATO, for the ATO (Australian Taxation Office) from having to suss out real deductions from dodgy deductions and for the Australian Taxpayer in getting audited and possibly not receiving a refund for this financial year.
The ATO (Australian Taxation Office) has certain bench marking categories that help narrow down what Individual Tax Return deductions are possibly frauded. For example:
Kiah is an advertisement manager at a local firm; she has claimed $10,000.00 in materials and supplies for work use. The extreme amount of Kiah’s deduction triggers the ATO’s systems. Due to the extreme amount for the deduction the ATO does an investigation and finds that Kiah’s deduction of $10,000.00 is extremely unlikely as she worked for a company who would have supplied the materials, and if they didn’t she would have been reimbursed if it was such a high figure. Due to this Kiah’s Individual Return has been processed to be audited by the ATO.
After further investigation, the ATO finds that Kiah’s place of employment has reimbursed her for what materials she did purchase and supplied majority of the supplies already. Due to this the ATO cannot allow this deduction to be made and a hefty fine is given to Kiah for frauding a deduction.
Another example could be:
John is a carpenter for a local company, in his Individual Tax Return John tries to claim over 20,000 kilometers for work travel. This raises suspicion to the ATO as carpenter’s returns usually do not claim this much in car travel. The ATO pushes John’s return to be audited and find that John does not actually have his driver’s license and cannot claim kilometres he personally did not travel. They also find that John was claiming for travel from work to home even though he was catching the local bus system.
Due to this the ATO gives John a hefty fine of $2,000.00.
Now you may be thinking, ‘But there’s still over eight million Australian’s lodging tax returns every year, mine won’t be closely looked at’. Well unfortunately your wrong. The ATO (Australian Taxation office) carefully scrutinizes every tax return that gets submitted to them and uses the benchmark method to make sure that people aren’t claiming suspicious amounts for their deductions. Some returns even get randomly chosen and cross examined. That’s why here at Refund Express we make sure to keep you in the loop when it comes to claiming deductions and what deductions are dodgy to the ATO’s standards.
So, you may be thinking ‘what’s considered a dodgy deduction?’, well lucky for you, Refund Express Australia has a few examples of dodgy deductions that will you fully understand what a dodgy deduction is;
Billy is a carpenter, he claims $3,700 in work-related car expenses for travel between his home and workplace, he has indicated that the expense was related to having to transport bulky tools to and from work. However, Billies employer has advised the ATO that the equipment could be securely stored at work, and that carrying them to and from work was his own personal choice and not a requirement for his job, this deduction is considered dodgy as he is claiming it is a requirement of his job.
Sarah is a cheese expert working in a high-end restaurant and takes annual leave to go to Europe for a holiday. She claims a thousand dollars in airfares, car trips and accommodation in her individual tax return. She also claims that she visited multiple cheese factories as a requirement of her job. All Sarah’s deductions relating to this trip are disallowed when the employer confirmed that the claims were in fact for a personal holiday.
Ronnie is a general practitioner, he made a claim for a conference he attended in New Orleans, he provided a receipt for the trip. However, when the ATO checked they found that he was still in Australia at the time of the conference. Ronnie’s claim for the trip was not allowed and he received a fine for a fraudulent deduction in his Australian Individual Tax Return.
Jean is a store manager, she has claimed deductions for car expenses using the logbook method. The ATO has found that she had recorded kilometers in her log book on days where there was no record of the car traveling on the toll roads, after further inquiries the ATO has identified that Jean was out of the country. Her claims are disallowed due to fraudulent reasons.
Casey is a nurse at a local hospital and has claimed a self-education expense for the cost of her rent of a residential property, which was not his main residence. Casey claims he had to incur the expense of renting the property as he ‘required peace and quiet for uninterrupted study which he could not have in his own home’. This is not deductible.
Allow with the rental expenses, Casey claimed the cost of a storage facility where Casey needed to store his books and study materials. He claimed he needed this because of the huge number of books and study material associated with his course and didn’t have space in his private or rented residence where these could be housed. This is also not deductible.
Claiming dodgy deductions can lead you to multiple fines and penalties from the ATO, we at Refund Express now have an easy way to see what deductions suit your occupation with our new Deduction Mate. Our deduction mate see’s what occupation you have and suggests possible deductions you could claim. If you do claim any deductions whether this be from the deduction mate or from your own knowledge it is always safer to provide a receipt and evidence that the deduction is valid and not fake.
We at Refund Express try to warn you about claiming dodgy deductions because not only is it illegal but the ATO (Australian Taxation Office) sends out fines for fraudulent deductions in a person’s Individual Tax Return. These fines could be from $110.00 to $210.00 and more. The ATO’s (Australian Taxation Offices) purpose for fines and penalties is to ensure that people don’t abuse the tax system here in Australia and claim expenses they have not actually accrued.
So, remember guys, a deduction is an expense you incurred as a requirement for your job and you need to keep all evidence to support your deductions encase the ATO (Australian Taxation Office) thinks you’re making false claims and decide to audit you.
If you have any other questions feel free to contact us at Refund Express.