In a world that seems to be predictable and even boring, it’s nice to stand out from the crowd. Indeed, you may take pride in your individuality and think that it is a strong asset when it comes to both your business and personal life. However, there are times to stand out and there are times to blend into the background, and Tax Day may be one of the latter. If the deadline is approaching and you need to send in that all-important return, why do you need to be careful and make sure that you don’t raise any red flags over at the ATO?
No Place to Hide
The tax authorities gather a great deal of information from a wide variety of different sources. They can take advantage of some sophisticated programs and advanced algorithms to help them sift through all this information at lightning speed. These algorithms are set up to raise a digital red flag should anything untoward crop up during such an analysis. Therefore, it’s never a good idea to claim some overly large deductions or make any other claims if this would be unusual for your peers. It’s likely that there are hundreds of people who have a very similar tax return to you, and the authority may want to talk to you in detail should you stand out from this crowd.
Taking a Shortcut
You may inadvertently “pop-up” if you try to estimate some of the figures instead of working on solid information. Some people are blasé about their tax return and overestimate the amount of tax that they have paid through their employer during the year. Of course, the ATO has other data to cross reference, and this will easily come to the fore.
More Complicated Areas
You may be quite careful to ensure that your key figures are accurate, but you may overlook certain other areas. For example, if you have an overseas property that you use for investment purposes, are you claiming the right amount? There are very strict rules here when it comes to what can and cannot be classified as expenditure. If you are not actively involved in promoting the property for rent when you’re not there, you might not be able to claim any of the deductions. Instead, you should apportion expenses so that they relate only to any weeks where your property is occupied by a renter, or when you can prove that you were actively looking for one.
Getting It Right
These are just some of the areas of concern and you would do well to take another look at your upcoming tax return. Talk with a tax agent who can provide additional advice and make sure that you blend in, rather than standing out.