How will the billions overpaid in tax returns affect insurance claims?
In the year 2014/15, it is estimated Australian individuals cost the federal government between $7-9 billion in income tax claims. This information, which was revealed during a new analysis, is believed to be a result of over-claiming on tax returns.

The Australian Taxation Office Deputy Commissioner, Alison Lendon, stated: “7 out of 10 returns randomly selected for review had one or more errors,” indicating that billions were incorrectly or falsely claimed.

How the ATO plan to combat this

In light of this information, the ATO has actioned to increase its use of technology so data can be more easily checked and auto-corrected by online databases. They will also endeavour to offer more advice and guidelines on income tax on a specific level, tailoring advice to individuals. It was announced that 2018 funding for the ATO is to be increased, financing these changes.

Mistakes that can be made on tax returns

• Claiming deductions that are not related to personal income
• Failing to keep relevant documents and receipts
• Private expenses being claimed as business expenses
• Not reporting wages paid in cash

Are insurance payments tax deductible?

The majority of tax claims are relative to circumstance and depend on factors such as your occupation and state of health. For example, whether or not your home insurance is tax deductible can vary depending on if you work from home – if you do, your home insurance may be considered an occupancy expense. If you have an insurance settlement you may be eligible for a ‘Goods and service tax’ reduction, if you can prove that the settlement relates to business purposes.

How do I prove I qualify for an insurance tax deduction

Keep thorough, precise records. Document every receipt, invoice or proof of financial transaction in an organised file. It may help to digitally scan such records to your computer so you have an online filing system that you can easily access. The ATO encourages and usually expects individuals to keep physical or written proof of tax deductions for five years after making the claim, so do not be tempted to throw old receipts away after filing.

Guardian Group Financial Planning

For insurance, it’s best to work with professionals. At the Guardian Group, we are insurance experts who also offer financial planning so we can advise you or your business on the relevant cover you need and how this will be represented on your taxes.

For more information, do not hesitate to contact us or get a quote for free! Our friendly team are here to offer you expert advice.