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The ATO wants new investors to be aware of the documentation they’ll need to lodge their tax returns.
The Australian Taxation Office (ATO) has a message for first time investors: keep your records up-to-date.
The ATO often encounters mistakes such as misreporting capital gains from the sale of shares and income in the form of dividends and distributions from taxpayers new to the investing field.
The growth of micro-investment platforms has allowed many newcomers access to stock trading, but the ATO noted that many aren't aware of how to handle the tax side of their portfolios.
“Unfortunately, first-time investors often don’t understand their taxation obligations, don’t keep appropriate records and are more likely to make mistakes when lodging their tax returns,” ATO assistant commissioner Tim Loh said.
The ATO is provided with data collected by the Australian Securities and Investments Commission (ASIC), brokers, exchanges, and share registries, on dividend payments and the purchase and sale of shares. This tax time, for example, information on 5.8 million transactions will automatically be added to the tax returns of 612,000 taxpayers.
“While this data makes tax time much simpler, it is still important for investors to check that all their relevant data has been included,” Mr Loh said.
Mr Loh urged new investors to check that all relevant data has been included in their tax return before lodging or to ensure their registered tax agent has all the necessary information before lodging.
The ATO noted that even the best registered tax agents can only work with the information they are given.
Mr Loh urged taxpayers to keep up-to-date records of:
“Keeping good records is the best way to ensure you are complying with your tax obligations,” Mr Loh said, warning of the headache that inaccurate lodgments cause.
“Errors related to CGT or income from dividends and distributions, whether deliberate or accidental, will lead to amendments. You may need to repay some or all of a tax refund and penalties may apply.”