CPA Australia is urging taxpayers to not rush into lodging their tax returns early, with this being one of the biggest and most common mistakes.
Last year, about three million individual tax returns were lodged by July 23, soaring to 5.8 million by August 20, data from the ATO shows.
CPA Australia tax lead Jenny Wong is urging taxpayers to take time to gather their evidence of work-related expenses over the next few weeks 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,” Ms Wong said.
“Firing the starting pistol on your tax return too quickly means you could end up shooting yourself in the foot,” she said.
“There’s a misconception that lodging early means you’ll receive your refund first, but it’s not as simple as that. It’s common for people who lodge early to end up having to amend their returns later anyway, so it’s best to wait. It’ll save you in the long run.”
Ms Wong said another common mistake people make is not giving enough thought to how their circumstances have changed over the past 12 months.
“Some people go into autopilot when they do their tax returns,” she said.
“They cut and paste from their last return and fail to consider any changes to their personal circumstances … turn off the autopilot and take time to seriously consider what’s different about your expenses this year and think about what you could claim.”
She said this could include travelling for work and not being reimbursed by your employer for meals or other travel essentials or starting a new job where you had to buy tools, subscriptions, or pay for training and security clearances, for example.
“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,” Ms Wong said.
CPA Australia encourages taxpayers to consider seeking professional advice with their returns, especially if they have complex finances and earning activities such as owning rental properties and crypto assets, with this cost itself being tax deductible.
CPA Australia’s tips to help complete your tax return are:
■ Out of pocket – Any out-of-pocket work-related expenses could be tax deductible, but you’ll need evidence in case you are asked in an audit. Think about what you’ve had to purchase for work. Check your bank statements.
■ Find the evidence – Hopefully your receipts aren’t down the back of the couch, but they might be in your emails and phone apps. Or maybe the junk draw?
Consider your working from home expenses – You may be able to claim expenses such as internet costs and printing ink and paper, so long as they can be legitimately attributed to work use.
■ Methods matter – Which work-from-home expense type makes most sense for you (fixed rate or actual cost method)? If you’ve been good at keeping records throughout the year, the actual cost method may be more beneficial.
■ Using your car for work – For vehicle expenses, you must be able to identify and justify the percentage that you are claiming as business use. To claim accurately, you will need to use a logbook or diary to show private versus business travel.
■Consider buying your essentials now – You still have until June 30 to purchase any essential work items and claim the deduction this tax time.
Ms Wong is reminding taxpayers not to exaggerate work-related claims.
“Getting your tax return right is your responsibility,” she said.
“This means declaring all of your income and claiming the appropriate expenses. 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.”
