Tax tips: Avoid these pitfalls when lodging your return
It’s almost tax time. As millions of Australians begin sorting out their financial records, the Australian Taxation Office (ATO) is advising people on how to dodge “speed bumps” when lodging their returns this year.
Assistant commissioner, Karen Foat said the ATO’s online myTax service processes most refunds in under two weeks, but silly mistakes could cause delays, or even slug you with a bill.
She said most people with simple tax affairs - whose income comprises their salary, savings account interest or dividends from an Australian company - should be able to get their taxes done in less than half an hour.
In the 2017-18 financial year, nearly nine million taxpayers claimed a total of $21.7 billion in work-related expenses, including travel, mobile phone and internet usage.
This year, the ATO is expecting the number of tax claims to increase, given that more Aussies have been working from home since COVID-19 shutdowns.
ATO linking: Don’t leave till too late
Foat advised first-time taxpayers to connect their myGov account to the ATO before 1 July, 2020.
Taking this step will enable you to not only lodge your return online, but also keep track of refunds and access past tax records.
To link up the services, you’ll need to answer two questions to confirm your identity. They will be based on personal information, such as your bank account details, or an income statement or a Centrelink payment summary from the past two years.
However, if you aren’t able to provide enough information, then you’ll need to get in touch with the ATO to grab a unique linking code, which can be entered instead of answering the questions. Just be sure to have your Tax File Number and driver’s licence or Medicare card at the ready before you call.
“Needing a linking code was the number one reason that people called us last July,” Foat said. “If you need a linking code, June is a great time to get that sorted.”
Income statements: Get tax ready first
Foat said another big cause of delay at tax time each year was 1 in 5 people lodged before they had all of their income information. So she advised Aussies to wait until the end of July to do their taxes.
“It’s important to check that your employer has finalised the information in your income statement and it is marked as ‘tax ready’ before you lodge,” she said.
Income statements contain information such as your salary or wages, Pay As You Go (PAYG) withholding tax and any employer super contributions. Employers have until 31 July to finalise those statements, which are then provided directly to the ATO and automatically included in your tax return.
“Other information from banks, health funds and government agencies will also be automatically inserted into your tax return. For most people this will happen by the end of July,” Foat added.
She said lodging once your prefill data becomes available makes the tax process a whole lot easier.
But if you are filling in the blanks yourself, double check that the information you’ve provided is “complete, accurate, and up to date”, in order to avoid delays or a debt down the track.
What happens if I make a mistake on my tax return?
Forgotten to include income from a previous job, or claim a deduction you were entitled to? Don’t panic! You can correct your mistake by requesting an income tax amendment, which can be done online via myGov, or submitted to the ATO as a form or letter.
Typically, you’ll have two years from the date of assessment to lodge your amendment. But if you don’t make the two-year cut-off, then you should submit an objection form instead.
Wondering how much tax you may be paying this year? Head over to our income tax calculator, and we’ll crunch the numbers for you.