The ATO has identified the top 10 tax myths and misunderstandings it says are causing incorrect claims.
One of the myths encountered by the ATO is that tax agents will take responsibility for their clients’ claims. If you use a tax agent, you are ultimately responsible for ensuring the information in your return, including the deductions you claim, is correct. You cannot transfer that responsibility to your agent so make sure you give them complete and accurate information.
Top of the list is the myth 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 you don’t need receipts for claims under $300 for work related expenses, $150 for laundry and 5000 kilometres, you still must have spent the money, it must be related to earning your income, and you must be able to explain how you calculated your claim,” said the ATO.
Another popular myth is that bank or credit card statements can be used in place of a receipt , but are unfortunately insufficient in providing enough detail to support the claim. Some items are claimable for a small number of taxpayers but it’s a myth that the majority can claim.
There are only a handful of taxpayers with special circumstances who can claim things like gym memberships or makeup containing sunscreen. For most, there isn’t a link to earning their income,
With more people working from home, the ATO is becoming concerned about taxpayers claiming their entire Foxtel or Netflix subscriptions, or their whole phone bill, on the basis that some part relates to earning their income.
Other myths in the top 10 include believing you can claim normal home to work trips; that you can claim plain clothes you wear to work, or claiming hair, clothes and makeup because you have to look good at events; or claiming all holiday travel expenses when only a few days are in relation to a conference or work.