Tax time is often a difficult moment for many Australians. The simplest of tax returns can totally disrupt your life as you rummage through hundreds or thousands of personal records to make sure your tax returns are in order.
Filing your tax returns and going after all the deductions often involve a lot of the nitty-gritty. However, even with caution and diligence, there are lots of ways in which people sabotage their tax returns. Here are three of the most common mistakes that many Aussies make when it comes to filing the tax returns.
Lodging Your Taxes Too Early
Now why is this really not a good idea? Most super-organized people will lodge their taxes by July and get their refunds in time. However, according to many tax experts, this is not necessarily a good thing. It will take some time before your tax details are sent to the Australian Taxation Office and if you lodge your taxes too early, it is possible to miss out on some useful information that could be beneficial for your tax situation.
People who are employed and who are subject to the Pay As You Go (PAYG) withholding have to wait for a payment summary to reach their letterbox and the Australian Taxation Office’s system in case they will be relying on the ATO’s pre-filled information. If you have invested some of your money in various assets, it is also prudent to be more patient when filing your tax returns so as not to miss out on important tax details. Most managed funds will not finalize their paperwork until September.
Using myTax to file complex tax returns
The ATO has gone out of its way to simplify the tax lodgment process with the launch of myTax tool. If your tax returns are simple and straightforward, this can be quite a handy tool. However, it is not the ideal option when things begin to get a little more complicated like multiple income streams, investments, trusts, business ownership or self-employment.
As your financial profile gets more complex, you are more likely to make mistakes during tax lodgment. We only get to file tax returns once in a year so it is easy to forget crucial steps in the process and make serious mistakes that are likely to cost you a lot of money. Some of the common mistakes include missing information, wrong figures in the calculations or incorrect all of which could end up costing you a lot more. In complex financial situations, it is more prudent to use a tax agent or an accountant Melbourne expert to handle your tax affairs.
Failing to Account for Your Superannuation
Even without superannuation, tax matters are generally complex enough. Throw in some superannuation into the mix and the difficulty level goes a notch higher. The situation is even more complex when you are making superannuation contributions not just via the employer superannuation guarantee but also through salary-sacrifice arrangements and concessional personal contributions. Without good knowledge on tax matters, you are likely going to be seriously disadvantaged.
In case of a concessional contribution, for example, you will be eligible for a tax deduction but you have to submit a Notice of Intent to claim this. Alternatively, you can claim tax deductions on concessional contributions by varying the deduction for personal contributions form. This form must be filled in advance before you lodge your tax returns.
If you are a business owner and are employing people, you have to pay the superannuation guarantee (SG) for your employees before the due date for these payments otherwise you will have to grapple with tough penalties and interest for the delay in payments. If you fail to meet your superannuation guarantee payments in time, you can also miss out on your tax deductions.
There is more to taxes than just the numbers. Talk to a professional accountant Melbourne to help you make sense of your tax situation and maximize on all the tax incentives that you may be eligible for.
