Tax tips: why you shouldn’t rush your return for a faster refund

A $1500 tax refund bonus tempts many to lodge their tax return quickly, but here’s why that may be unwise.

Millions of Australians are in line for their biggest tax refund in years, but they are being warned not to rush their return.

An enlarged Low and Middle Income Tax Offset this year of up to $1500 – paid via tax refunds – will tempt many people to file faster, but this can risk an investigation from the Australian Taxation Office.

The ATO says “the stakes are high” for early lodgers, and last year it amended more than 140,000 tax returns of people who got it wrong.

“People who lodge in July are twice as likely to have their returns adjusted by the ATO,” assistant commissioner Tim Loh says.

The ATO collects data from employers, banks, health insurers, share registries and others, and pre-fills this on people’s tax returns, but pre-filling is not usually finalised until late July.

This means the 10 million-plus people receiving a full or partial Low and Middle Income Tax Offset (LMITO) are being urged to be patient.

ATO assistant commissioner Tim Loh says you can check if your data has been pre-filled.

In the March the maximum LMITO for 2021-22 was lifted from $1080 to $1500 per person, and this is expected to be its last year.

H&R Block director of tax communications Mark Chapman says there is always a rush to do tax in the first two weeks of July, and the LMITO is causing an extra spike.

“The LMITO is a big incentive for people to lodge early, particularly if they are a bit strapped for cash,” he says.

But the danger of lodging now is that your wages, bank deposits, share dividends and other information has not yet been provided to the ATO, Chapman says.

“So be very careful you have the original source documentation – if you want to override the pre-fill you have to expect some interest from the ATO,” he says.

“It’s worth pointing out that the ATO isn’t going to pay any refunds until the 16th of July.

“If you are going to lodge early, its definitely worth using a tax accountant to make sure your return is accurate.”

The ATO’s Loh says people can check if their information has been pre-filled using the ATO app or via ATO online services on myGov.

“Waiting for the ATO to upload information means people don’t have to roll the dice when they lodge, and it’s less likely an amendment will need to be made later, which could result in a tax debt,” he says.

Originally published as Tax tips: why you shouldn’t rush your return for a faster refund