Sadly, not everyone prepares their tax returns correctly. In either case, it's a loss for everyone - whether it was an honest mistake or a deliberate act.
We should pay the correct amount of taxes every year because the Australian tax system is designed to be fair to everyone. Each year, the ATO contacts around 2 million taxpayers to review their tax returns, although not all of these people will undergo a full audit.
People who deal primarily in cash or have experienced large fluctuations in income are more likely to attract the attention of the ATO. Even if you think you have everything in order, a full audit by the ATO can consume a huge amount of time and resources. Therefore, stay on top of your paperwork and ensure that you have receipts and documentation to back up all of your claims.
There are a few things you can do to avoid getting audited if you want to avoid the hassle:
Don't forget to file your taxes on time.
There is nothing complicated about this. You are less likely to make mistakes if you keep track of your tax returns and allow yourself ample time to prepare and lodge your documents. It also means your returns will be less likely to be scrutinized when they're submitted on time.
Check your deductions multiple times and review your calculations.
Getting your numbers triple-checked (and double-checked again) is a good way to make sure everything is correct before filing your tax return. A tax agent is a handy way to ensure you tick all the right boxes because a good accountant can spot any errors and bring them to your attention.
Don't declare deductions that you don't have the right to make!
You can claim a number of different deductions when preparing your tax return, although the amount varies greatly depending on your occupation or industry.
You must only claim legitimate deductions, and you must have receipts or other documentation to prove your claims. Making creative deductions is not a good idea, because you won't just have to pay it all back if you get caught, but you'll also have to pay a hefty fine as well.
Record everything meticulously.
Even though we already said to hold on to receipts for every single purchase, we will say it again to emphasize how crucial it is. There is no problem with digital records as long as price, vendor, and item details are clearly visible. Written evidence is generally required for claims over $300, but it's a good idea to keep all of your records in case of an emergency.
Keeping cash records should be a top priority.
Some jobs and businesses (such as taxi drivers, tradesmen, and shopkeepers) rely heavily on cash payments, which is perfectly fine as long as you keep meticulous records.
Cash-based businesses tend to receive more attention from the ATO, so be aware that you might be on their radar if you deal mainly in cash. However, you can avoid a problem if you're extra cautious with your records to ensure you're not under-declaring your income.
Clarity is important.
A clear and easy-to-understand tax claim will go a long way toward preventing an audit. It's likely to be less time consuming for the ATO to follow up on a claim if the ATO easily understands your claim. You might be asked to provide additional information and possibly written proof if your tax return contains a lot of vague or suspicious claims.
Numerous "experts" will claim they can maximize your deductions and gain more money for you by using dubious methods. Keep in mind that YOU are ultimately responsible for your actions, and if you get caught, you'll be the one who gets in trouble. A reliable, trusted source such as Instant Tax Refunds can assist if you are unsure or need assistance.
A few simple steps can reduce your chances of getting audited by the ATO, providing greater peace of mind, and saving yourself a lot of time and hassle.
Feel free to contact us for any assistance you may require. At Instant Tax Refunds, we strive to provide high-quality service that constantly meets and sometimes exceeds our customers' expectations.