As tax season approaches, millions of Australians are gearing up to lodge their tax returns with the Australian Taxation Office (ATO). With many anticipating a boost in their finances through tax refunds, experts advise caution in the submission process.
CPA Australia strongly cautions against the rush to file returns on July 1, the earliest permissible date. Jenny Wong, the tax lead at CPA Australia, emphasises the potential pitfalls of submitting early. “Jumping the gun might lead to errors that require rectification later, which can create more hassle than it’s worth,” she warns.
The belief that early filing guarantees faster refunds is a common misconception. Wong notes that many who file prematurely often find themselves needing to make amendments later, underscoring the need for patience. Especially in light of the ongoing cost-of-living crisis, the urgency for some to receive their refunds—averaging around $1,288 last year—can be understandable. Recent data indicates that a significant portion of this money (24%) is expected to go towards essential expenses like household bills and insurance, while others intend to address debts such as credit card payments and mortgages.
Before lodging a tax return, Wong advises waiting for all necessary information from employers and health insurers, which can take weeks to compile. This diligence ensures that returns are accurate and reflective of actual income and expenses over the past year, rather than mere replicas of past submissions.
Wong highlights a concerning trend where individuals simply copy and paste previous tax returns without assessing changes in their financial circumstances. “It’s vital to step back and evaluate any shifts in expenses and potential claims that are unique to this financial year,” she states.
For instance, expenses related to work travel or home office setups may vary each year, and failing to account for these could mean missing out on significant entitlements. In addition, Wong advises against seeking tax advice from artificial intelligence platforms like ChatGPT. She reiterates that the responsibility for accurate tax declarations rests squarely on the shoulders of the individual; negligence could invite audits from the ATO.
Ultimately, thorough preparation and a conscious approach to tax returns can lead to maximised refunds. “Making an effort to fully disclose earnings and claims will ensure you receive the most advantageous tax outcome,” Wong concludes.
As tax season unfolds, staying informed and adopting a meticulous filing strategy can help Australians navigate this crucial financial task successfully.