‘Never a good thing’: Note you don’t want to see on your tax return

If you lodge your tax return and see this note from the ATO, then you could be in for a very “disappointing surprise” this tax time.

A tax expert has called out Aussies who keep making the same mistake when lodging their returns, warning it could leave them with a “disappointing surprise”.

At the start of the new financial year, Hripsime Demirdjian, founder of Australian accounting firm Hive Wise, urged people not to lodge their tax returns too early.

She warned doing so could cause issues as you would likely be lodging your return based on incomplete payroll data, as most employers had until July 14 to finalise this with the ATO.

It appears, there are some Aussies who did not heed this warning, with Ms Demirdjian sharing one such example in a recent TikTok.

“This is exactly why I said do not lodge your tax return on the 1st of July. No one listened. Look at this,” she said.

The tax expert was referring to a 24-year-old Aussie named Skye, who took to the social media app after lodging her tax return and initially being told her estimated refund would be $3083.

However, that all changed after a note appeared on her refund saying it had gone into “extra processing time”.

After this, Skye was shocked to see her refund estimate had gone down to $341.56.

“Why am I only getting that? Someone please explain,” she asked.

This messaged popped up after Skye lodged her tax return. Picture: skyemichele00/TikTok

Ms Demirdjian said this was a prime example of why people should be waiting to lodge their tax returns, rather than doing it as soon as they can.

Speaking to news.com.au, she said “extra processing time” will occur when the ATO’s system identifies that the information you have lodged in your tax return is incomplete.

“This will typically occur when you’ve lodged too early prior to your pre-filling data being marked as ‘tax ready’,” the Sydney-based accountant said.

“The ‘tax-readiness’ of the pre-filling data will be different for everyone.

“The ATO will use this extra time to verify the information you’ve lodged with other government and third-party agencies, such as Centrelink, your bank and private health insurance providers. The ATO may even contact you directly during this time if they require additional information,” she said.

Ms Demirdjian warned having your return flagged for extra review is “never a good thing” and, ideally, you would want to remain below the ATOs radar when it comes to your tax affairs.

“Depending on how incomplete the information is in your tax return, your refund may be lower than the original tax estimate,” she said.

“You could even find yourself in a tax payable position which may come as a disappointing surprise.”

If your return is flagged for review, the ATO will usually amend your tax return to include the correct information, which can often result in you owing the tax office money.

On top of this, if the amendment occurs after the due date of your tax return, you’ll end up paying interest on the late payment as well, which is currently being charged at an eye watering rate of 11.36 per cent.

Ms Demirdjian also hit out at a common misconception that lodging your tax return will automatically result in a big refund – one of the big drivers behind people rushing to lodge their returns as soon as possible.

Receiving a big refund either means your employer held too much tax from your wages – which she warns “isn’t a good thing” – or you have significant deductions that reduce your taxable income.

The ATO is cracking down on working from home expenses this tax return period. Picture: iStock

“If you don’t have either of the above, then it’s unlikely that you will receive a big refund,” she previously told news.com.au.

Aussies were issued a stern warning from the ATO ahead of tax time this year, with working from home (WFH) expenses one of the key areas coming under intense scrutiny.

Workers were warned not to “double dip” when submitting their tax return.

ATO Assistant Commissioner Rob Thomson said WFH expenses are one of the areas people are most likely to get wrong.

He said while these mistakes are often genuine, there are also cases where they are “deliberate”.

Last year, more than eight million people claimed a work-related deduction, with around half of those claimed for working from home.

There are two different ways employees can calculate their work from home deductions: the fixed rate and the actual cost method.

Mixing up these methods is what often leads to people ‘double dipping’, whether they realise they are doing it or not.