Big tax returns nothing to boast about according to an Australian tax accountant

An Australian tax expert has revealed why getting a big tax return this year is nothing to boast about.

Many Aussies are itching to get their hands on their tax refund, and everyone is hoping this year’s refund will nice and chunky.

However, an Australian tax accountant claims a big tax return is nothing to boast about.

Tax Invest Accounting director Belinda Raso has revealed exactly why Aussies should be annoyed by a $5000 refund.

According to the ATO, if you have paid too much tax during the year, then you will receive the extra as a credit back to your tax income. Picture: iStock

“If you’re getting a $5,000 refund, think about how much you could have got in interest,” she told Yahoo.

“Basically the ATO’s earned that interest. It’s not a good thing.

“If your employer has withheld correctly, you won’t get a refund.

“Your refunds are based purely on deductions. So if you have none, you’re not going to get a refund.”

According to the ATO, if you have paid too much tax during the year, then you will receive the extra as a credit back to your tax income.

This could happen if you chose to pay more, or asked your employer to withhold more tax or if you did not claim the tax free threshold.

But before any refund is issued, that money is offset against Commonwealth debts that might be held with agencies such as the ATO or Centrelink.

The ATO advised people to avoid rushing to lodge their tax returns in early July so mistakes weren’t made.

According to ATO assistant commissioner Rob Thomson, people should avoid rushing to lodge their tax returns in early July.

Mr Thomson said people who lodged their return in early July were twice as likely to make a mistake in their tax return, especially people who received income from multiple sources.

From late July, most information from employers, banks, government agencies and health funds will be automatically loaded into your tax return, regardless of whether you use a registered tax agent or lodge your own return.

“Tax time is not a race, and there is a much higher chance that your return will be missing important information if you lodge in early July,” he said.

“We see lots of mistakes where people who rush to lodge early have forgotten to include interest from banks, dividend income, payments from government agencies and private health insurance details.”

From late July, most information from employers, banks, government agencies and health funds will be automatically loaded into your tax return, regardless of whether you use a registered tax agent or lodge your own return.

Mr Thomson said the best thing to do now was get a head start on your tax obligations by gathering all the necessary records and reviewing the occupation guides on the ATO website to check what you’re entitled to.

“We know some prefer to tick their tax return off the to-do list early and not think about it for another 12 months, but the best way to get it right is to wait just a few weeks to lodge,” he said

“You can check if your employer has marked your income statement as ‘tax ready’ as well as if your pre-fill is available in myTax before you lodge.

“Once the information we collect is available, all you need to do is check it and add anything that’s missing.”

H & R Block director of tax communications Mark Chapman offered some tips on how people could maximise their tax return and areas of focus for the ATO.

H & R Block director of tax communications Mark Chapman offered some tips on their website on how people could maximise their tax return and areas of focus for the ATO.

Mr Chapman said every year the ATO focused on certain hotspots were taxpayers were prone to making errors either accidentally or deliberately.

He said some last minute planning would also help people to maximise their refund for the year, particularly for people who ran their own business or used their cars and mobile phones as part of their job.

Originally published as Big tax returns nothing to boast about according to an Australian tax accountant