July Newsletter
As another tax year rolls to a close, it is encouraging to see that life is getting back to normal, albeit a somewhat new normal, after the last couple of years interruption to our working lives.
Calculations by the Institute of Public Accountants have revealed that taxpayers could be up for a larger-than-expected tax refund this year due to a combination of three factors, including the continuation of the Low Middle Income Tax Offset (LMITO) worth up to $1,080 per individual, four and a half months of backdated stage 2 tax cuts worth up to $800, and the ability to claim working-from-home expenses for a large part of the financial year valued at around $1,500.
While the temptation to lodge early this year may be great, taxpayers have been urged to hold out until the ATO finalises income statements and pre-fill information to avoid a surprise tax bill down the road.
“We understand that some individuals have been adversely impacted by COVID-19 through loss of employment or reduced earnings and they will want to get their hands on their refund as quickly as possible,” said the IPA’s chief executive, Andrew Conway.
The big danger in moving too quickly is the limited pre-fill information which progressively appears well after the end of the financial year. The ATO receives a plethora of data from other government agencies such as Services Australia and the Land Titles Offices. In addition, there is data coming from third-party providers such as financial institutions, share registry companies, and companies and trusts paying dividends or distributions.
“It is no longer just interest, dividends and trust distributions that the ATO will be looking for,” Mr Conway said. “Gains on property and cryptocurrency transactions, side hustles on e-commerce platforms, contractor services performed in sectors which have been previously found to be non-compliant, derivative trading etc. are among the information that the ATO will compare with what has been lodged. “If someone has any income from these varied sources, then it is even more important not to lodge early until this data has had time to hit the pre-fill records. “The ATO already amends quite a number of returns post-lodgement. Discrepancies will create reverse workflow and expose taxpayers to interest and/or penalties, and additional accounting fees.”
We haven’t increased the price of our individual tax returns this year, in spite of our costs escalating, however, if we need to lodge an amendment for you because information was not included, we will be charging an amended lodgement fee of $110. In light of this, we would prefer to delay tax return lodgements until 1 August 2022. You are more than welcome to email or drop your paperwork in prior to this so that you are on our list at this very busy time of year when we will be preparing end of financial year information for our business clients.
