ATO advice: Big change to WFH claims and best time to lodge return

The cost of living crisis is encouraging Aussies to lodge tax returns as soon as possible. But the ATO says this won’t necessarily speed up payments. See why.

Aussies are rushing to lodge their tax returns as soon as possible, as they rely on the reimbursements to make ends meet amid cost of living pressures.

Two-thirds said they planned to do their taxes earlier than usual and more than half (54 per cent) worried their return may not be enough to cover what they need, according to an exclusive survey by MYOB and Pollfish.

For most respondents, any money they got back would go straight to catching up on bills (43 per cent) or into savings accounts (41 per cent).

ATO assistant commissioner Tim Loh. Picture: Supplied

Only a minority were hanging out for holiday funds (13 per cent) or planning to buy something “frivolous” (4 per cent).

Although it may be tempting to lodge a return on July 1 and get that payment rolling, Australian Taxation Office assistant commissioner Tim Loh advised waiting a couple of weeks.

“Every year we have eager people who want to lodge their return in the first week of July and we know the cost of living pressures people are under, but we see people who lodge early (can) make a lot of mistakes and that slows down their returns quite a bit,” he said.

“The best time to lodge is the end of July.

“A lot of third party information from banks, employers and health funds, if you have private insurance, is automatically included in your tax return (by then).”

He said online lodgements were typically processed within two weeks, and progress could be tracked in the ATO app.

Imogen Leaver has her tax return ready to lodge. Picture: Supplied

Mother-of-two Imogen Leaver already has her tax return prepared, set to be lodged as soon as the new financial year ticks over.

“(My partner and I) had our accountant prep it early because we are refinancing our home loan,” Ms Leaver, who works in financial planning, said.

Their mortgage broker was able to reduce their interest rate by about 2 per cent using their tax time information, and they want to start that new rate as soon as possible.

Meanwhile, ArtSHINE co-founder Stuart Horrex hoped to fast-track the tax return for his social enterprise, which helps artists and designers with the business side of their creative practices.

“Things are tight so being able to get access to that money sooner rather than later is something we are keen to do,” he said.

“We always do our best to be on time and do things properly but this year it is definitely front of mind and more urgent.”

ArtSHINE co-founder Stuart Horrex plans to do his tax as soon as possible to pay bills and keep his business running. Picture: Christian Anstey

The MYOB survey showed many Australians were confused at tax time.

About two in five respondents (42 per cent) did not know if they would owe tax or have money coming in, and 61 per cent were unsure what expenses they could claim.

Mr Loh said the biggest change to tax returns this year was that workers could now claim a deduction for working from home costs via the fixed rate method whether or not they had a dedicated home office space.

And the fixed rate had increased from 52 cents to 67 cents per work hour.

“You can be at the dining table, kitchen bench or sofa, you don’t need a dedicated working space to access that method now,” he said.

“We know millions of Aussies have been working from home but we know bosses have also asked (many) to head back into the office so make sure you don’t just copy and paste last year’s claims.”

Griffith University’s Nicholas Rohde predicts cost of living pain for a while longer. Picture: Supplied

Despite the potential for increased WFH deductions, Griffith University econometrics associate professor Nicholas Rohde said tax returns may be “disappointing” for a lot of Aussies this year.

Bracket creep – in which wages rise but tax rates and thresholds stay the same, pulling more people into higher tax brackets – was going to be a problem for many.

“If my income goes up 10 per cent and the price of everything goes up 10 per cent, where I stand nothing changes, but my total tax bill will be higher,” he said.

“Anyone who has seen their nominal income go up will be paying more tax.”

Mr Rohde said cost of living pressures would also likely continue for a while, although inflation was slowly coming down in Australia and other developed countries.

“The Reserve Bank of Australia doesn’t forecast normal levels of inflation until 2025 so my guess is high inflation and cost of living problems for a year, maybe even longer,” he said.