Now that tax time has passed, the Australian Tax Office (ATO) will be hard at work auditing Australian taxpayers for their tax returns, looking for errors and mistakes that have been made.
Identifying Mistakes in Tax Returns
If you believe you have made a mistake or the ATO has made a mistake, or actually get called out by the ATO as someone who has made a mistake, there is a process to amend your tax return. Today, I’m going to be taking you through that process.
Welcome back to my channel, my name is Rhys, and in today’s video, I’m going to be talking about and taking you through how you would go about making an amendment to your tax return. There is absolutely a process in place to correct a mistake made on your tax return. This process is not only essential for maintaining compliance but also for ensuring that you are not paying more or less tax than you owe.
Understanding the Importance of Correcting Mistakes
Mistakes in tax returns can lead to serious consequences, including penalties and legal issues. Correcting these mistakes promptly is crucial. Whether it’s an error in the amount claimed or a misinterpretation of tax laws, understanding the process to amend the tax return can save both time and money.
Types of Mistakes and Who Can Make Them
Keep in mind that depending on the type of mistake or amendment required, there are different processes to follow. The fault and blame can be thrown on both sides of the field. The Australian taxpayer, accountant, or tax agent could make a mistake, and the ATO could assess the tax return incorrectly.
Common mistakes made by taxpayers and the ATO include:
- Trying to Claim Too Much Money: Overestimating deductions or credits can lead to an inflated refund and potential legal issues.
- Not Claiming Enough Money: Underestimating deductions or credits means you might pay more tax than necessary.
- Incorrectly Declaring Income: Failing to report all sources of income can lead to penalties and interest.
- Forgetting Basic but Important Information: Missing out on essential details like Social Security numbers or bank account information can delay the processing of your return.
- Not Keeping Track of Expenses for Investment Properties: Without proper documentation, you may lose out on valuable deductions.
- Forgetting to Claim Personal Expenses for Rental Properties: Overlooking these expenses can lead to a higher tax liability.
Identifying and correcting mistakes in tax returns is a vital part of the tax filing process. By understanding the common errors and knowing how to amend them, taxpayers can avoid unnecessary complications and ensure that their tax obligations are met accurately.
Who Can Submit an Amendment?
The same goes for who can submit an amendment to your tax return. You, the individual taxpayer, your accountant, a sole trader, a company, or a business can submit amendments for your tax returns.
Understanding the Eligibility to Submit an Amendment
The ability to submit an amendment is not restricted to the individual taxpayer alone. Various entities and professionals involved in the tax filing process have the authority to make necessary corrections. Here’s a detailed look at who can submit an amendment:
- Individual Taxpayer: If you have filed the return yourself, you have the right to amend it.
- Accountant or Tax Agent: Professionals who handle tax matters can submit an amendment on behalf of their clients.
- Sole Trader: Business owners operating as sole traders can amend their returns.
- Company: Corporations have the ability to amend tax returns through authorized representatives.
- Business: Different types of businesses, including partnerships and LLCs, can submit amendments.
The Amendment Process
If you were audited by the ATO and a discrepancy was found, and you didn’t agree with it, you will need to submit something called an objection. There is no fee associated with doing this, but it is a time-sensitive process, and you must submit it within two to four years of wherever your tax return was submitted.
The most common way to lodge an amendment for your tax return is online through myGov. The actual process is very simple, and online amendments are generally processed within 20 days. This digital approach streamlines the process, making it accessible and efficient for taxpayers.
Outcome of the Amendment
The result of the amendment can have different financial implications:
- If the amendment reduces the amount of tax that you owe for that financial year, you will receive a refund via bank transfer. This refund is a direct acknowledgment of the correction made and is processed promptly.
- If your amendment increases the amount of tax that you owe to the ATO, you will be required to make that repayment in full. This may occur if previously unreported income is discovered or if deductions are disallowed.
The process of amending a tax return is an essential aspect of tax compliance in Australia. Whether you are an individual, a business, or a tax professional, understanding who can submit an amendment, the process to do so, and the potential outcomes is vital for maintaining accuracy and integrity in the tax system.
The ATO is not trying to get you in trouble. They may make mistakes just as well as you may make mistakes. The key thing here is that there’s a process to follow if a mistake is made, and I highly encourage you to follow that process to resolve the issue.