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Melbourne Woman Warns Against Early Tax Returns After ATO Audit
Melbourne resident Jen Rothwell is advising Australians to wait before submitting their tax returns for the 2024-25 financial year following a significant $1,130 tax bill she received from the Australian Taxation Office (ATO). As tax season opens, both accountants and the ATO are recommending that taxpayers hold off for a few weeks before filing their returns.
The Audit Experience
Rothwell, 28, was recently audited by the ATO and discovered that she had not included $2,000 in interest from a term deposit in her taxable income. The ATO receives interest information directly from banks, which often pre-fills into tax returns. However, this data may not be finalised until late July, creating a risk for those who lodge their tax returns too early—like Rothwell did last year, in early July.
This oversight led to a major financial discrepancy. Rothwell initially received a $1,200 refund instead of the accurate $115 she would have qualified for, resulting in an unexpected tax bill. "I was stunned as I’ve never owed the ATO this much before, especially while I’m saving for a wedding," she explained.
Importance of Timing
Lodging too early can lead to missing key financial information, a mistake Rothwell advises others against repeating. She now has a payment plan with the ATO to manage her debt, which will be repaid in about 64 weeks. Any future tax refunds will automatically offset this debt.
Others have shared similar experiences, underscoring the importance of waiting for financial data to be fully reported. Rothwell’s video sharing her tax experience resonated with many, with several commenters revealing they faced similar issues. One shared they were charged an additional $700 for inadvertently filing too soon, while another lamented discovering discrepancies while preparing for the current year’s tax return.
ATO Recommendations
The ATO cautions taxpayers to refrain from lodging their returns until their income statements are marked as ‘tax ready’ and all relevant data is pre-filled. Notably, over 142,000 Australians who filed within the first two weeks of July faced audits or were forced to amend their returns due to inaccuracies, which frequently involved unreported income.
Rob Thomson, ATO assistant commissioner, advised that the best time to lodge tax returns is from late July when the information for pre-filling tends to be complete. "We pre-fill information from your employer, banks, government agencies, and health funds to help ensure accuracy in your tax return," he stated.
Preparing for Tax Time
Tax professionals like Hripsime Demirdjian from Hive Wise recommend that individuals with straightforward income, such as salaried employees, can start preparing their returns by mid-July. However, those with more complex tax situations, including investments, should wait until August or September for full data availability.
If a tax bill is received, it must be paid by the date on the ATO’s notice of assessment. Taxpayers unable to meet this deadline can apply for a payment plan, allowing them to manage their debts more easily. However, any outstanding amounts after the due date will incur interest charges, currently at 10.78% annually, compounding daily.
Conclusion
Rothwell’s cautionary tale serves as a reminder for Australians to take a careful approach when it comes to tax returns. By waiting for all pre-filled information to be ready and ensuring accurate reporting, taxpayers can avoid unpleasant surprises and potential financial strain. Rothwell encourages anyone considering early lodging to think twice, saying, "In this instance, patience truly pays off."
