Skip to content

3 Common Tax Myths Debunked

Do you feel stressed just thinking about tax time? Managing your personal or business tax returns can be made a lot easier with the help of an expert. Our team help clients grow their lifestyles and their businesses through our effective tax minimisation strategies. We can assist in lowering your tax while ensuring that all your tax obligations are met. Here, our registered tax agents debunk just some of the most common tax myths, so you can head more confidently towards tax time.


1 I Can Pay Myself A Smaller Income To Avoid Income Tax

If you’re a business owner, there’s an endless array of decisions that have to be made. And one of the most important is how much you should pay yourself. If you’re a sole proprietor, all income generated from your business will count towards individual taxes owed. However, if you own an enterprise with an incorporated business structure, you’ll have to pay individual tax on your salary.

Don’t fall into the trap of thinking you can pay yourself a low wage in order to reduce your taxes or claim the tax-free threshold. While this sounds appealing in theory, you could run the risk of ATO auditing if your wage appears too low when compared with the profits of your company.

2 Everyone Is Entitled To Claim A Standard Deduction

To successfully claim a standard deduction of $150 for laundry, $300 for work-related expenses or up to 5000 km for car related expenses, you must meet certain criteria. The deduction needs to be directly related to earning your income (ie drycleaning your uniform), you must have spent the money yourself (you don’t need to show a receipt for this kind of deduction), and you must be able to demonstrate how you’ve calculated the expense. Also, you must not have been reimbursed for this amount.

Remember, you can’t claim clothing costs unless you wear a company uniform, occupation-specific or protective clothing. So, if you need an outfit to attend a conference or you’re required to wear a specific colour or clothing style, you won’t be able to claim this expense.

You can’t claim travel to and from work, nor will you be able to claim deductions for your entire internet, phone or streaming service bill — even if it is indeed work-related. Instead, you’ll have to apportion the cost between private and business usage, claiming only the work-related part of your expenses.

3 My Tax Agent Is Responsible For My Tax Claims

While your registered tax agent will ensure that your tax return is filed and your legal responsibilities are met, they are not responsible for your claims. Your tax return is based on information that you give your tax agent, so the onus is on you to make sure that all details are correct. Consider the benefits of utilising apps or cloud-based technology to keep track of receipts and accounting paperwork throughout the year.

Our helpful team at Your Tax Mate can make tax time a less stressful and hectic experience for business owners and individuals. We’re here to provide you with smart strategies and accurate advice, so you can avoid many of the most common tax myths which lead to inaccurate tax returns and ATO auditing. Get in touch with our Ipswich registered tax agents today and let us assist you. Call Your Tax Mate at our Goodna office on 07 3818 2442.

* The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organisation, employer or company.