As the date approaches for Australians to lodge their tax returns with the Australian Taxation Office (ATO), many are eagerly anticipating a tax refund that could provide much-needed financial relief. However, financial experts recommend a cautious approach, advising taxpayers to take their time and ensure accuracy in their submissions.
Jenny Wong, the tax lead at CPA Australia, cautions against the rush to submit tax returns on July 1, the first day that Australians are allowed to do so. Wong asserts that hurrying can lead to mistakes, urging individuals to refrain from submitting forms too quickly.
“Lodging your tax return prematurely can result in needing to make amendments later on, which can be more time-consuming and frustrating,” Wong explains. The perception that filing early guarantees a quicker refund is misleading, as many taxpayers end up revisiting their returns to correct errors.
The cost-of-living crisis has intensified the urgency for some to receive their tax refunds. Data from Finder, a financial information website, indicates that the average expected tax refund for last year was approximately $1,288 per individual. For nearly a quarter of Australians, this tax refund is earmarked for essential expenses like household bills or insurance premiums.
Wong emphasises the importance of waiting for all relevant information to be available before lodging a tax return. This includes accurate details from employers and private health insurers, which can take several weeks to compile. Consequently, some may need to delay their submissions until late July or early August to ensure all information is correct.
A critical aspect of lodging a tax return is ensuring it accurately reflects the taxpayer’s financial situation over the past year. Wong warns against the common practice of copying and pasting details from previous returns without considering any changes that may have occurred. “It’s crucial to review your expenses and income carefully,” she advises. “Failing to do so could mean missing out on potential refunds you’re entitled to.”
Changes in personal circumstances, such as starting a new job or working from home, can significantly affect a person’s tax situation. Fluctuating work-related expenses can lead to missed opportunities for deductions if not carefully documented in the tax return. For instance, new job responsibilities may require additional tools or training, and these costs can often be claimed.
CPA Australia also highlights the limitations of relying on artificial intelligence technologies, such as ChatGPT, for tax advice. Wong stresses that crafting an accurate tax return remains the taxpayer’s responsibility. Misdeclaring income or overlooking legitimate deductions can increase the likelihood of ATO audits and ultimately reduce the refund amount.
In summary, as Australians prepare to navigate the upcoming tax season, prudent preparation is paramount. Understanding the nuances of tax submissions, waiting for comprehensive information, and accurately reflecting personal financial circumstances in tax returns will lead to smoother processing and potentially higher refunds.
By approaching the tax submission process thoughtfully, taxpayers can enhance their financial standing whilst ensuring compliance with ATO regulations.
