ATO debunks misunderstood tax agent myth

In revealing its top 10 tax myths, the ATO cited a common myth among taxpayers that if they use a tax agent, then the agents will take full responsibility for their claims.

It addressed the myth, saying that even if someone uses a tax agent to file tax claims, they are ultimately responsible for ensuring the information in their return, including the deductions claims, is correct.

Further, the ATO said that clients cannot transfer that responsibility to their agent, so the onus is on them to make sure agents are given complete and accurate information.

“Whether you prepare your own return or you use an agent, you are ultimately responsible for ensuring your claims are correct,” said ATO assistant commissioner Kath Anderson.

She also added that unreliable tax advice is leaving taxpayers exposed.

“Taxpayers listen to advice from many sources, including tax agents, colleagues, family and friends, and even helpful shop assistants,” Ms Anderson said.

“While some advice is correct, some isn’t and it’s leading to mistakes and errors that can be costly.”

At the top of the list of tax myths, according to the ATO, was the idea that everyone is entitled to claim a ‘standard deduction’ of $150 for laundry, 5,000 kilometres for cars or $300 for work-related expenses.

“While it’s true that you don’t need to keep detailed receipts for deductions up to those amounts, it’s not an automatic entitlement,” Ms Anderson said.

“You still need to meet the three golden rules – you must have spent the money yourself; it must be directly related to earning your income; and you must be able to show us how you calculated your claim.”

Another myth the ATO found was gaining popularity is that taxpayers only need to keep credit card statements as proof of claims.

“Around half of the adjustments we make are because taxpayers didn’t keep proper records and therefore they could not demonstrate that they spent the money, what it was spent on and how the expenditure links to earning their income,” Ms Anderson said.

“A credit card statement will not usually have enough detail to support the claim.”