Myths and Facts

 

 

When it comes to taxes, misinformation can lead to costly mistakes or missed opportunities. Let’s clear up some of the most common tax myths and set the record straight so you can approach tax season with confidence.

 

Myth 1: “I Don’t Need to Lodge a Tax Return if I Earn Below the Tax-Free Threshold.”

The Truth: Even if your income is below $18,200, you may still need to lodge a tax return to declare other sources of income, like interest from savings or government payments. Plus, lodging ensures you get any withheld tax refunded.

Myth 2: “All Work-Related Expenses Are Tax Deductible.”

The Truth: Not every work expense qualifies for deductions. Expenses must be directly related to your job and not reimbursed by your employer. For example, a chef can claim knives, but a uniform that’s not occupation-specific (like black pants) wouldn’t qualify.

Myth 3: “I Can Claim Deductions Without Receipts.”

The Truth: You must have records to support your claims. While there is a $300 threshold for work-related expenses that doesn’t require receipts, you still need evidence like diary entries or bank statements to back it up.

Myth 4: “I’ll Only Be Taxed on My Salary.”

The Truth: The ATO considers all taxable income, including rent from investment properties, dividends, and side hustles. If you earn income beyond your salary, it must be declared.

Myth 5: “Doing My Taxes Is Cheaper Than Using a Tax Agent.”

The Truth: While DIY tax returns may save you upfront costs, tax agents often help maximise your refund by uncovering deductions and offsets you might overlook. Plus, their fee is tax-deductible!

Myth 6: “The ATO Won’t Notice Small Mistakes.”

The Truth: The ATO uses advanced data-matching technology to cross-check information, so even small errors or omissions can raise a red flag. Honesty and accuracy are key.

Myth 7: “I Can’t Claim My Home Office If I Also Go to Work.”

The Truth: If you work from home occasionally, you may still claim expenses like electricity and internet. The ATO offers several methods, such as the fixed-rate or actual-cost methods, to calculate these deductions.

Myth 8: “The Tax Deadline Doesn’t Apply If I Have a Tax Agent.”

The Truth: While registered tax agents often get an extension for lodging returns, you must still engage them before 31 October to qualify for extra time.

Myth 9: “Paying More Tax Means I Earned Too Much.”

The Truth: Higher tax bills can result from factors like receiving income without PAYG withholding (e.g., freelance work) or incorrectly estimated instalments, not necessarily because you earned more.

Myth 10: “I Don’t Need Tax Planning If I Don’t Own a Business.”

The Truth: Tax planning isn’t just for businesses. Individuals can benefit by strategising for deductions, offsets, and capital gains tax, ensuring you keep more of your hard-earned money.


Don’t Let Tax Myths Hold You Back

At Tax Accounting Adelaide, we’re here to bust the myths and help you maximise your tax outcomes. Whether you’re lodging as an individual or managing a business, we’ll guide you through the facts for a smooth tax season.

Contact us today for a free consultation and let’s get your taxes right, myth-free!

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