‘Don’t be one of those people’: Big reason to hold off on lodging your tax return

If you’re one of those Aussies who always rushes to lodge their tax return as early as possible, there is a big reason you may want to hold off this year.

If you are the type of person who rushes to lodge their tax return as soon as possible then you may want to rethink your strategy, with a Sydney accountant claiming doing it too early could cause some big issues.

Hripsime Demirdjian, founder of Australian accounting firm Hive Wise, has warned Aussies against jumping the gun when it comes to tax time this year.

“Do not be one of those people who go and lodge their tax return on July 1,” she said in a video shared to social media.

In fact, for most salaried employees, the best option is to hold off until after July 14, which is how long employers have to finalise their 2024 payroll data with the ATO.

Lodging your return before this date could mean you are basing it off incomplete payroll data. Ms Demirdjian told news.com.au there is “major room for error during this period”.

She said that, up until the July 14 deadline, employers are not only finalising wages, but other payroll related information such as Reportable Fringe Benefit Amounts (RFBA) and Employee Share Schemes (ESS).

“The latter can have a significant impact on your taxable income,” she said.

Ms Demirdjian said information from third parties, such as private health insurance and interest summaries from banks, may also take longer to finalise.

“Therefore, if you lodge your tax return too early, you might find yourself under-reporting your income and not making all the correct disclosures,” she said.

She also warned the ATO’s data matching systems are becoming more sophisticated.

This means that if information is received that doesn’t match up with what the employer or third parties have provided, then there is a higher risk the ATO will flag your return for review.

If this happens, Ms Demirdjian said the ATO will usually amend your tax return to include the correct information, which often results in you owing the tax office money.

“To make matters worse, if the amendment occurs after the due date of your tax return, you’ll end up paying interest on this late payment as well,” she said.

“The ATO is currently charging interest at an eye watering rate of 11.36 per cent.”

She 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 Ms Demirdjian warns “isn’t a good thing” – or you have significant deductions that reduce your taxable income.

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

There is a common misconception that lodging your tax return means you will automatically be getting a refund. Picture: iStock

The ATO has already issued a stern warning to Australians ahead of tax time, with working from home expenses one of the key areas coming under intense scrutiny.

Workers have been 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 that, 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.

“One thing we’re focused on this year is making sure that people don’t double dip, so they don’t claim things like their internet or their phone expenses separately if they’re using that fixed rate method,” Mr Thomson told the ABC, adding that the other area of focus is record keeping.

“People need to keep a record of all the hours they’ve worked from home for the whole year.

“Now that can be a time-sheet, that can be a spreadsheet, that can be a diary, whatever the person wants that works for them.”

Originally published as ‘Don’t be one of those people’: Big reason to hold off on lodging your tax return