Refunds rush: Why it’s too early to do your tax return right now

FOUR out of five Australian taxpayers receive a tax refund each year, which is a good incentive to do their tax return quickly. But rushing into it is dangerous in these days of electronic data.

DRUMROLL please … Feel the excitement … embrace your financial destiny …. It’s tax time!

June 30 is done and millions of us are eager to be paid a handy tax refund soon. About four out of five of Australia’s 13.5 million taxpayers receive a refund each year averaging more than $2500, according to Australian Taxation Office data.

So why not get cracking right away?

While you’re welcome to start working on your tax return, most people who try to finish it all immediately are risking trouble.

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It’s time to talk tax, but don’t jump the gun when filing your return.

That’s because everything is electronic these days, and while the ATO pre-fills your tax return with your income data, the people who pay you that income are not always quick off the mark:

• EMPLOYERS don’t have to get their payment summaries to you and report it to the ATO until July 14;

• BANKS and share registries typically don’t report their interest and dividend payments to investors or the ATO for a few weeks after July 1;

• HEALTH insurance data can also take a few weeks, and;

• MANAGED funds — don’t get me started on managed funds — some of these investments can infuriate you by not sending you or the ATO your income tax data until September.

It can be a frustrating wait for a refund if you have anything but the most basic tax affairs.

If you decide to do it all yourself manually and quickly, beware that our new age of tax technology means that a simple oversight or small error can be picked up by the ATO and potentially lead to a wider review.

ATO assistant commissioner Kath Anderson said last week that even a one-off income payment from somewhere could be enough to raise a red flag. “We know some people lodge early because they want their refund, and that’s fair enough. But we amend returns for thousands of taxpayers who leave out some of their income,” she said.

Individuals have until October 31 to get their tax in.

The ATO’s systems match what you put on your tax return with official figures provided by employers, banks, investments and other parties that pay you money. The widespread use of electronic payments — especially for side income from things like Uber and Airbnb — leaves a trail that’s easy to track.

I’ve been using the ATO’s online lodgement system myTax, and it’s predecessor eTax, for many years and always found it to be accurate, although the ATO tells taxpayers to double-check the numbers it pre-fills on myTax returns or provides to tax agents.

Claiming tax deductions is more of a grey area because it’s sometimes subjective — for example, what proportion of your mobile phone or car use is work-related and therefore deductible?

Overeager taxpayers can be caught out making accidental or deliberate mistakes, because the ATO’s data technology will compares your deductions with workers in similar occupations earning similar incomes.

If something smells a bit fishy, it sends in the fishermen — in the form of a review and potentially an audit.

Nobody wants that sort of hassle simply by trying to get their refund a few weeks earlier.

@keanemoney