While it may seem instinctively preferable to lodge your tax returns early, the Institute of Public Accountants (IPA) is advising against it. Taxpayers will be able to lodge their taxes from July 1, 2021, with the Australian Tax Office (ATO) stating they will begin “full processing” from July 7, 2021. The IPA has indicated that many are likely to receive larger than expected tax refunds this year. This has been attributed to several factors including the COVID-19 related payments.
This year taxpayers will be able to make work-from-home expense claims that are worth up to $1,500. There is also the Low Middle Income Tax Offset (LMITO) that provides a maximum offset of $1,080 for those with taxable incomes of between $48,000 to $90,000, and an offset of up to $255 for those earning less than $37,000. Some taxpayers are also expected to benefit from up to four months of stage 2 tax cuts that may be worth up to $800. Comparison website Finder estimates that the average refund will be as much as $2,600.
IPA CEO, Andrew Conway, said that though people were eager to get their refunds, it was best to wait till the ATO finalised income statements and pre-fill information to avoid complications down the line. He said pre-fill information continues to stream in even after the end of the financial year. The ATO gathers data from various government agencies and third party providers.
This year it is expected to get new data on cryptocurrency transactions, some e-commerce sales and gig economy activities. The addition of these new revenue streams is likely to result in an increase in amendments and audits for taxpayers. Conway has advised taxpayers to allow a little more extra time for such data to reach pre-fill records to avoid discrepancies and possible penalties to taxpayers.
Andrew Gardiner, a senior tax manager at Corporate Seminars Australia also recommends that taxpayers be patient. He has advised waiting at least two weeks to allow for data to be populated. Gardiner pointed out that early lodgement could result in ‘please explain’ responses from the ATO that could delay refunds. He further advised taxpayers to prepare their documentation in good time and ensure their accounts on the government’s online portal were correctly updated.
Ben Johnston of Johnston Advisory is also against filing too soon as those taxpayers will likely be forced to amend their returns later or could end up being audited by the ATO. He confirmed that this could result in a delayed payout.