As millions of Australians prepare to submit their tax returns to the Australian Taxation Office (ATO) in the coming weeks, a significant number are anticipating a financial boost in the form of refunds. However, amidst this rush for cash, taxpayers are being cautioned not to hastily lodge their returns.
Finder’s recent research reveals that over 10 million Australians expect a tax refund this year, with the average amount estimated to be $1,519. Alarmingly, 7% of respondents stated that this additional cash would be “critical” to their financial wellbeing.
Graham Cooke, Finder’s head of consumer research, noted that many Australians are keen to access these funds to alleviate financial pressure, especially as households struggle with the rising cost of living. Cooke warned that for those living paycheck to paycheck, these refunds could provide essential support for everyday expenses.
The research indicates that nearly one in four Australians deem their tax refund as “very important” for their financial health. Women, in particular, are more likely to rely on refunds, with 39% describing them as “critical” or “very important,” compared to just 24% of men. Conversely, 18% of respondents expect to receive a tax bill instead of a refund.
Amidst the urgency to claim refunds, Cooke has advised taxpayers to consider how best to use their refunds. He suggested using the funds to pay off debts, contribute to a high-interest savings account, or bolster superannuation to secure long-term benefits.
Moreover, experts are urging individuals not to rush the submission of their tax returns. CPA Australia’s tax lead, Jenny Wong, has highlighted the importance of carefully gathering evidence of work-related expenses before lodging. She cautioned that prematurely filing returns could lead to mistakes and missed deductions. Wong explained that there is a prevalent misconception that lodging early guarantees a quicker refund, but this is not always the case. Those who file early often find themselves needing to amend their returns later on.
The ATO typically advises waiting until the end of July to lodge return claims, as this allows time for necessary information—such as bank interest, dividend income, government payments, and health insurance details—to be pre-filled in the tax forms. This year, the ATO is expected to focus on common errors, particularly pertaining to work-related expenses, home office deductions, and multiple income streams.
In summary, while anticipation for tax refunds is at a high this year, Australians are encouraged to approach their tax returns with caution. Taking the necessary time to ensure accuracy can prevent costly mistakes and optimise financial outcomes.
