Beware the early lodgment tax trap, CPA Australia warns
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Rushing to lodge tax returns on time is likely to be one of the “biggest and most common” mistakes made by taxpayers this year, according to CPA Australia.
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The accounting body is warning taxpayers to be wary of rushing to lodge their ‘DIY’ tax return during tax time as it can lead to errors and missing information.
Data from the Tax Office showed that almost 3 million individual tax returns were lodged by 23 July last year, which climbed to 5.8 million by 20 August.
Jenny Wong, tax lead at CPA Australia, said she urged taxpayers to take their time to gather their evidence of work-related expenses and wait for the ATO to pre-fill their information before lodging.
“Cost-of-living pressures could mean some people are eager to lodge their tax return as quickly as possible to access a refund, but it’s important to be patient, gather your evidence and claim everything you are entitled to,” Wong said.
“Firing the starting pistol on your tax return too quickly means you could end up shooting yourself in the foot.”
CPA Australia outlined certain areas to help taxpayers complete their individual tax return and claim deductions, such as thinking about work-related expenses, finding receipt evidence, working from home expenses, vehicle expenses and purchasing essential items before tax time.
A common misconception made by taxpayers was the idea that lodging their tax return early would result in them receiving their refund first, which was not the case.
Usually, those who lodged early almost always had to amend their returns later, so it was always best to wait and ensure all information was correct, Wong said.
Another common mistake was inadequate thought on how their personal and professional circumstances had changed over the 12-month period.
“Some people go into autopilot when they do their tax returns. They cut and paste from their last return and fail to consider any changes to their personal circumstances,” she said.
“Turn off the autopilot and take time to seriously consider what’s different about your expenses this year and what you could claim. Check what type of expenses you could claim that are relevant to your type of work. The ATO has a comprehensive guide to industry and occupation types. We strongly advise against using AI advice when preparing your tax return.”
CPA added that it encouraged taxpayers to consider seeking professional advice with their returns, especially if they had complex finances and owned assets, as well as urging taxpayers not to exaggerate work-related claims.
“Getting your tax return right is your responsibility. This means declaring all of your income and claiming the appropriate expenses,” Wong said.
“Failure to properly declare your income increases your chances of being audited by the ATO. Failing to claim everything you’re entitled to means less cash back than you could otherwise get.”
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