Taxpayers must ensure they are ‘tax literate’: CPA
Australia’s complex system means too many people are making costly mistakes on their returns, says the association.
Taxpayers must ensure they are “tax literate” this end-of-financial year as CPA Australia found many Australians are making costly mistakes on their returns.
CPA Australia’s senior manager of tax policy Elinor Kasapidis encouraged taxpayers to upskill themselves to avoid losing money due to mistakes in their returns.
“The level of incorrect tax returns in this country tells us too many Aussies aren’t tax literate,” said Ms Kasapidis.
“It costs them in unclaimed deductions and it costs Australia in missed tax revenue. We want everyone to make sure they get their tax right this tax time.”
“There is a multibillion-dollar shortfall between Australia’s tax take and what people should be paying. For some groups of taxpayers over 90 per cent of returns are wrong.”
As the ATO would be scrutinising each tax return, the association warned taxpayers that their return is their responsibility.
CPA Australia also sympathised with taxpayers and claimed the Australian tax system was too convoluted.
“The Australian tax system is way too complex; it’s one of the most complex in the world,” said the association.
“The way our tax system works, if you don’t claim a legitimate deduction, you won’t get it.”
“Plenty of taxpayers miss out on refunds because they don’t know what they can claim. With cost-of-living biting, a few hundred dollars in missed deductions may really hurt this year.”
To help improve tax time literacy the association has promoted a three-step framework called – the “Three Rs”.
“Just as reading, writing and arithmetic are the three Rs in school, there are three crucial skills that need to be learned for tax time,” it said.
CPA Australia’s “Three Rs” of tax literacy are:
• Record everything – “Get your record keeping right this tax time. Ensure you’ve got copies of receipts. Keep a detailed diary throughout the year noting down when you worked from home. Hold on to documents relating to your expenses, such as electricity and other bills.”
• Be realistic – “Be realistic when submitting your tax return. The tax office is unlikely to accept a deduction for a packet of Tim Tams eaten in your coffee break at home. As much as your colleagues like to see your pot plants, the ATO won’t accept claims for home-office decor.”
• Reach out – “You can cut your own hair, but you’ll get a better result if you see a professional. If you see a tax agent, you can be confident you’re paying the right amount of tax and getting the maximum refund you’re entitled to.”