Incorrect work-related expense claims cost billions, ATO warns

The Australian Taxation Office (ATO) has revealed some of the most common mistakes people make at tax time. 

Assistant Commissioner Karen Foat said that errors range from honest mistakes to people deliberately over-claiming to increase their refund.

The Tax Office warned that a small amount of over-claiming by a large number of individuals adds up to billions of dollars, meaning that essential community services are missing out. 

“People can lodge now, and if they have all of the information they need to do their returns accurately, that’s ok,” Ms Foat said.

“However, we know from previous years that the early birds who lodge in the first weeks of July are far more likely to make mistakes or submit incomplete data. These mistakes may slow down your return, or result in a debt owing to the ATO if we later need to correct the information.” 

Ms Foat revealed that this tax time will see the ATO's sophisticated data-matching systems process an unprecedented amount of information and will track money moving around the economy. 

“We will be analysing over 650 million pieces of data from banks and financial institutions, employers, the sharing economy, rental property managers, cryptocurrency exchanges and share registries

“Our data-matching will help us match what you’ve earned, whether from a traditional 9-5 job, a casual position or sharing economy income. Failing to declare all your income will result in you ending up with a bill when we later match your data,” Ms Foat said. 

She cautioned taxpayers to make sure they are aware of what they can claim and to follow the ATO's three golden rules: you have to have spent the money yourself and not been reimbursed; the claim must be directly related to earning your income; and you must have a record to prove it.

“Many people rely on advice from friends and co-workers on what is an acceptable claim, and the information may not always be accurate.

“This sees the ATO rejecting thousands of ineligible claims each year for things like gym memberships, travelling to and from work, conventional clothing and the private portion of phone and internet costs,” Ms Foat said.