Many businesses struggle to wrap up their financial year and feel confident about their tax return. Even small errors in reporting can lead to an unexpected ATO notice or a missed refund. If you are also familiar with such situations, then you are not alone. Countless businesses in Sydney make tax mistakes and incur penalties as a result. If you want to avoid this situation for your business, read this blog.

In this blog, we will break down the most common tax errors that businesses make and how they impact their operations. In the end, we will explain how a qualified tax agent can save you from unnecessary penalties and even help you boost your tax return.

5 Common Tax Return Mistakes in Sydney

Below are some common mistakes that Sydney businesses must avoid to prevent penalties and maximize their tax return.

1. Claiming Ineligible Expenses

Many businesses confuse personal expenses with business expenses and claim personal expenses or non-deductible costs as business-related. The ATO closely monitors this misreporting, which can lead to fines and audits. Therefore, it is important to always double-check your legitimate business expenses and keep receipts as proof.

2. Incorrect Income Reporting

Incorrect income reporting can lead to serious issues when lodging tax returns. This often occurs when you forget to add income from other sources, omit capital gains, neglect to declare employee shares, or fail to include dividends from private companies. These misreporting’s can result in penalties and additional tax liabilities when the ATO reviews your return.

3. Claiming Deductions Without Proper Records

Another common mistake that can lead to penalties and ATO audits is when taxpayers claim deductions without maintaining proper records. The ATO (Australian Taxation Office) requires evidence for all deductions claimed on your tax return, such as receipts and invoices. Without these records, claims can easily be disallowed, leading to additional liabilities and penalties. It’s important to keep receipts for work-related subscriptions, even if they are small.

4. Overestimating or Miscalculating Deductions

Many taxpayers unintentionally confuse personal and business expenses. For example, personal travels that could be family vacations may be misclassified as work-related expenses when claiming tax refunds. It is important to clearly separate your personal and work-related expenses to avoid penalties, audits, and the repayment of any tax refunds you have received.

5. Missing Tax Deadlines

Many taxpayers fail to submit their reports before deadlines, resulting in penalties. To avoid costly consequences, it is recommended to set reminders for important dates and tax return deadlines. This proactive approach can help you stay organized and compliant.

Why Working with a Professional Tax Agent Matters

To avoid costly mistakes, penalties, and ATO audits, hiring professional tax agents is essential. They can:

• Help ensure accuracy in lodging expenses
• Keep you compliant with Sydney and Australian tax laws and regulations
• Identify opportunities for legal tax savings
• Save you precious time and reduce last-minute stress

Choose Outback Accounting for a Seamless Tax Return Experience

Avoiding costly tax mistakes is not only about staying compliant; it is also about protecting your business profits and your peace of mind. If you want to have a seamless tax return experience, consider Outback Accounting for your business. Our tax professionals simplify the process for you and ensure that every figure, deduction, and report is accurate and compliant with ATO standards. Whether you are a small business or a larger enterprise, we provide seamless, stress-free tax return services and help you save on legal taxes. Book your consultation today with our Sydney tax experts.

Frequently Asked Questions

What are some common tax return mistakes businesses make in Sydney?

Claiming ineligible deductions, incorrect income reporting, inaccurate record keeping, and missing tax deadlines are common mistakes that can lead to ATO audits, penalties, and missed refunds.

Do I have to submit receipts with my tax return? 

You don’t need to attach receipts with your tax return, but you must keep them to support your expenses, such as receipts, cancelled cheques, or bills. You will need to present these records to prove your deductions.

How strict is ATO?

The Australian Taxation Office (ATO) is known for being fair but firm. It’s strict with those who break the rules and takes mistakes or dishonesty seriously. Using advanced data-matching systems, the ATO cross-checks your tax return with banks, employers, clients, and other financial records. That’s why it’s essential to stay honest and accurate in reporting.

What happens if you make mistakes on your tax return?

If you have made a mistake on your text return, you can submit an amendment request to your text return using online services. For that, you need a myGov account linked to the ATO to access online services. Click here to review how to request an amendment to your text return.

Why is my tax refund so low in Australia?

Reasons for low tax refunds include changes on your income, unpaid fines deducted from your refunds, or you might have paid less tax throughout the year so there is less refund and disallowed deductions by ATO.

My tax return is too high, what should I do?

In case of high tax refund, consider double-checking your tax return details to see if there is any error. Review your payment summary, bank interest, investment income, and compare with ATO pre-filed data to ensure accuracy. If you do not find any error, contact ATO before spending the refund. 

Do small businesses need tax agent support?

Yes, small businesses require professional tax agents’ support to prevent costly tax reporting mistakes and avoid tax penalties in Sydney. Contact our experts for personalized support and guidance for your small business.