Hasten slowly on tax refunds, experts warn
THERE has been a big jump in the number of Australians rushing to get a fast tax refund, but there’s a potential sting.
Tax specialists warn that being quick off the mark can result in costly errors because Australian Taxation Office technology is likely to spot undeclared income.
Payment summaries from employers are not due until July 14, while the ATO’s prefilled data such as bank interest and share dividends may not appear on electronic returns until mid-August.
ATO figures obtained by News Corp Australia show about 300,000 individuals and tax agents lodged electronic returns in the first week of July, up 20 per cent on last year.
“More than 20 per cent of lodgements have been via a mobile device,” assistant commissioner Kath Anderson said.
Ms Anderson said the ATO contacted about 350,000 people each year about errors in their tax returns.
“One of the most common mistakes we see is people forgetting to declare all their income,” she said.
“We know taxpayers like to get in early and lodge in the first month of tax time, but our analysis shows if you lodge in July you’re far more likely to make a mistake by leaving out some of your income.”
Ms Anderson said people should remember to include all income including wages, interest and dividends, income from the sharing economy, government payments, income from cash jobs and capital gains.
Almost four out of five of the nation’s 13 million-plus individual taxpayers receive a tax refund.
Deakin University Depart- ment of Accounting Associate Professor Adrian Raftery said understating income was the biggest issue at tax time.
“My advice would be to wait unless you are absolutely certain that you have correctly recorded your income in your lodged tax return,” he said.
Dr Raftery said people who had changed jobs should make sure they had all their PAYG payment summaries “otherwise you will get a nasty surprise once the ATO catches up with you”.
“The ATO’s data-matching systems are getting better and better as they add more agen- cies to their long list of sources. They are aware of share and property sales for capital gains tax purposes.”
Dr Raftery said people who were caught would receive a please explain letter from the ATO “plus an amended assessment down the track, usually with penalties attached”.
“Hopefully you haven’t spent all of the original refund when you have to pay back the shortfall to the taxman. There’s nothing worse than having spent money that isn’t yours and there is knocking at the door asking for it back.”