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ATO Urges Aussies to Avoid Submitting "Half-baked" Tax Return

ATO Urges Aussies to Avoid Submitting “Half-baked” Tax Return

Filing a tax return accurately and on time is a crucial responsibility for people and businesses in Australia. The Australian Taxation Office (ATO) requires taxpayers to provide complete and accurate information to ensure the proper calculation of taxes owed or refunds due.

This article explores the importance of filing tax returns with all data accounted for and explains why filing them early may lead to costly mistakes.

Aussies Urged to Wait Before Lodging Tax Return

The ATO estimated that up to 14 million Australians are eager to file their returns come 1 July. However, as people are trying to estimate whether they will have a rebate, officials said the end of a $1500 tax break for low-and-middle-income earners may herald the possibility of smaller rebates.

While it may seem tempting to file tax returns as early as 1 July, there are important reasons why this practice is generally discouraged. According to Tim Loh, the ATO assistant commissioner, tax returns submitted in the beginning of July are more prone to modifications by the ATO compared to those submitted at a later time.

“While you can lodge from 1 July, there is a much higher chance that your return will be missing important information if you lodge your return before late July. If you forget to include everything, it will slow down the progress of your return, and you’ll likely end up with more work to do down the track,” Loh said.

“No one likes life admin, and we want to help save you somewhere we can. If you have simple affairs, by waiting a few more weeks until all your information is pre-filled into your tax return, you’ll save yourself extra work and worry by getting it right the first time.

“If you tried to bake a cake in an oven that wasn’t pre-heated, you’d end up with a half-baked disaster. Lodging your tax return before everything is ready is similar. Be patient, wait for your data to be pre- filled, and you’ll end up with a perfectly baked tax return.”

Why File your Tax Returns Early?

Early Refunds

One of the primary advantages of filing tax returns early is the potential to receive your tax refund sooner. If you are eligible for a refund, filing early allows the ATO to process your return promptly, resulting in faster payment of any funds owed to you.

This can be particularly beneficial if you have financial obligations or plans that require immediate access to the refund.

Reduced Stress

Filing taxes can be a stressful task, especially as the tax deadline approaches. By filing early, you can alleviate the pressure of last-minute preparations and possible delays. Getting your taxes out of the way can provide a sense of relief, allowing you to focus on other important matters in your life or business.

Increased Financial Organisation

Early filing of tax returns forces you to gather and organise all necessary financial documents and information in a timely manner. This can promote better financial discipline and organisation throughout the year. Staying on top of your financial records can offer a clearer picture of your financial health and make significant decisions throughout the year.

Settling Accounts

The ATO only allows early filing of tax returns before 1 July if you are leaving Australia for good.

The team at Ruth Watson and Associates said expatriates who have lived in Australia for a long time and paid income taxes can file their returns early. Australian Residents can also file their returns early provided they will no longer be in Australia for tax purposes. In both instances, they must prove they will not earn any income in Australia anymore except for money from interest and dividends.

Drawbacks of Filing Tax Returns Early

Overlooking Accuracy

When it comes to filing tax returns, accuracy is paramount. Providing complete and accurate data ensures that your tax liability or refund is calculated correctly. Rushing the process may result in overlooking vital deductions, credits, or income details. Taking the time to gather all relevant information and supporting documents ensures that you are correctly reporting your financial affairs to the ATO.

Mistakes and Audit Triggers

Filing tax returns early without careful consideration can increase the likelihood of making mistakes. Rushing through the process may result in mathematical errors, omission of income, or improper documentation. Such mistakes can lead to penalties, interest charges, or even an audit by the ATO.

Take the time to review your tax return thoroughly to identify and rectify any errors or inconsistencies, reducing the chances of attracting unnecessary attention from tax authorities.

Limited Time for Information Gathering

Filing tax returns early can limit the amount of time available for gathering all necessary financial information. Rushing to meet an early deadline may result in incomplete or inaccurate reporting, which can lead to penalties and additional administrative burden later on.

Wait until you have gathered all relevant data, including income statements, expense receipts, and investment information, to ensure a comprehensive and accurate tax return.

ATO Assistant Commissioner Tim Loh said a good benchmark is to wait until at least mid-July, as health insurers, employers, and the banks also put in their data related to you.

Changes in Personal Circumstances and Tax Laws

Filing tax returns early may not account for any changes in personal circumstances or tax laws that occur throughout the financial year. Various events such as marriage, divorce, birth of a child, or changes in employment can significantly impact your tax situation.

Additionally, tax laws and regulations may change, introducing new deductions, credits, or reporting requirements. Filing early may risk missing out on potential tax benefits or failing to comply with the latest regulations.

It is necessary to weigh the advantages and disadvantages of filing tax returns early and consider your individual circumstances. While early filing may offer benefits such as early refunds and reduced stress, it is also wise to ensure accuracy, proper tax planning, and consider any changes personally or in tax laws.

Seek professional advice to help you make a rational decision.

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DISCLAIMER:  This article is for informational purposes only and does not constitute official tax advice. UBOMI has no relations with any tax authority or taxation professional mentioned. Please consult your tax accountant immediately.