The best time to lodge your return

Many Aussies are desperate to get their tax return this year, but lodging too early (or too late) could cost you.

It’s tax time and that means that over the next few months, millions of Australians are going to be lodging their tax return. Many of these taxpayers will be looking to lodge early to obtain a speedy refund. But is that wise? And when actually is the best time to lodge your tax return?

Tax time technically begins on July 1 because that is the date from which you can lodge a tax return with the Australian Taxation Office (ATO). But you need to be careful during the first few weeks because, by lodging too early, you’ll end up missing some vital information.

For example, for wages and salary, income statements have replaced payment summaries, which means all the information is lodged digitally and automatically provided directly to the ATO. Income statements show year-to-date salary and wages, PAYG withholding tax, and any employer super contributions, but employers have until July 31 to finalise this information.

Only when this is done will the income statement be marked as ‘tax ready’. Therefore, it’s important to check that your employer has finalised the information in your income statement and it is marked as ‘tax ready’ before you lodge.

If you lodge before your income statement is ‘tax ready’, you will be relying on incomplete information, which might change. This will lead to your tax return being wrong and needing to be amended after it is lodged, potentially affecting the amount of your refund.

It’s not just employers who are affected. Information from banks, health funds, and government agencies will also be automatically inserted into your tax return and, for most people, this will only be completed at the end of July.

So, when is the best time to lodge your tax return? After all the information has been downloaded into your tax return. This date is different for everyone but at a minimum, it means waiting until the middle of July onwards.

 

What if my tax return is lodged late?

Deadlines to lodge tax returns are currently October 31 for self-lodging individuals and May 15 for returns lodged through an accountant. Most taxpayers need to lodge an income tax return every year but, for those who may have fallen behind because they were, for example, busy, overseas, too daunted by the process or trying to avoid paying the ATO may face penalties.

If you lodge late, you could be charged a “failure to lodge on time” penalty which is $275 for every 28-day period or part thereof that the return is outstanding, until the penalty reaches a maximum of $1,375.

If you continue to fail to lodge, the ATO may issue a formal default assessment warning letter, which will contain an estimate of your income for the missing year. The ATO can use this to issue you with a default assessment. This estimated figure will almost certainly be higher than the actual figure because the ATO won’t include deductions.

As a last resort, the ATO can even prosecute you for not lodging.

The ATO won’t generally apply penalties if it owes you a refund. In other circumstances, the ATO may waive penalties. As a general rule of thumb, the ATO is more likely to apply a penalty if:

  • You have more than one return outstanding
  • You have a poor lodgement history
  • You are non-compliant with other tax matters

 

So, when is the best time to lodge?

As we have seen, from mid-July onwards is generally a good time to lodge, particularly if you are due a refund.

You can lodge safely until October 31, 2023, but if you think you will miss that deadline, it is vital to register with a tax agent ahead of time to get the extended tax agent deadline of May 15 next year.

article from: au.finance.yahoo.com