It’s tax time again! Here’s how to prepare

By now most of us have arranged our tax documents together in preparation for a meeting with our tax accountant, but beware of whom the ATO is targeting this year.

The ATO uses sophisticated data matching techniques to compare certain expense claims with data collected over the years. If you fall outside the “norm” then you could find yourself receiving a please explain letter from the ATO asking for further information and receipts.

Who the ATO is targeting

Generally, tradespeople are the main targets with specific reference to plumbers this year. In addition, people in IT and defence force commissioned officers are also in the spotlight. For those with rental properties, deductions claimed for repairs when they are of a capital nature are always on the radar. Investments made by medical practitioners are also of particular focus.

The most common please explain from the ATO seems to be missed income.  When you open a bank account or purchase shares you are asked to provide a TFN, the payment of interest and dividends is then reported to the ATO. The ATO then matches this data with your lodged tax return. These days your tax agent can download, from the tax agent’s portal, a summary of interest and dividends received so technically this shouldn’t be a problem unless you do your tax return yourself!

Deductions for “work-related expenses” attract the most scrutiny, so be well informed of what you can and can’t claim in your industry. Certain industries have fact sheets available from the ATO website so you can get a general feel for what is and isn’t allowed.

Seek professional financial planning advice and you’ll be much better off in the long run.

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This article contains general advice only, which has been prepared without taking into account the objectives, financial situation or needs of any person. You should, therefore, consider the appropriateness of the information in light of your own objectives, financial situation or needs and read all relevant Product Disclosure Statements before acting on the information. Whilst every care has been taken to ensure the accuracy of the material, Paradigm Strategic Planning or Sentry Advice Pty Ltd will not bear responsibility or liability for any action taken by any person, persons or organisation on the purported basis of information contained herein. Without limiting the generality of the foregoing, no person, persons or organisation should invest monies or take action on reliance of the material contained herein but instead should satisfy themselves independently of the appropriateness of such action.

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