Ask LH: I Made A Mistake On My Tax: Now What?

what if i made a mistake on my tax return

Hey Lifehacker, I think that I have done my tax wrong for the past two years. I’ve put in claims for a computer that I believe I should have claimed less for. If I believe I buggered up, so what can I do to rectify it? What will happen if I don’t fix it? Thanks, Confused Claim

Water picture from Shutterstock “>Tax picture from Shutterstock

Dear CC,

It may be tempting to adopt a head-in-the-sand approach to old tax errors in the hope that they never get picked up on. We would advise against this however. Apart from being dishonest, it’s also risky — especially in light of the ATO’s crackdown on computer-related claims this year.

TAX WEEK 2014

Honest mistakes happen and being upfront is a better idea than trying to conceal it. Your first step is to talk to your accountant. If you don’t have an accountant, find one and make an appointment to discuss the issue. A friend or family member should be able to recommend a suitable candidate.

A good accountant will do everything within the law to bring your tax affairs in order. After assessing the error, they will be able to identify any loopholes or “wriggle room” that might be at your disposal. If a tax amendment does need to be made, they can then talk you

through the steps and streamline the process.

In most cases, the ATO will not harshly penalise an individual who makes a voluntary disclosure or amendment to their tax return. As the organisation states on its website :

Just as we accept your tax return information at face value, in most cases we do the same with the information you provide on your request for an amendment.

Any administrative penalties or interest charges are generally at the discretion of the tax office. However, these are sure to be substantially higher if you come under investigation while keeping quiet:

The amount of any reduction in penalty amounts and interest charges depends on when you tell us about the correction. Generally, the reduction is greater if you make the disclosure before we notify you of an examination. You will have to pay any tax you owe and may have to ask us for any interest concessions.

In your case, we’re only talking about a percentage error on a single computer, so any accumulated interest you’re forced to pay back is going to be pretty negligible. For more information on how to make a voluntary disclosure, head to the ATO’s website .

If any wily bookkeepers are reading, share your own tips with CC in the comments section below.

Cheers

Lifehacker

Got your own question you want to put to Lifehacker? Send it using our contact form .

Source: www.lifehacker.com.au

Category: Taxes

Similar articles: