Taxpayers are being advised that lodging their 2019 tax return early in July could prove to be a costly mistake, particularly in light of several changes coming into force in the new financial year.
“We understand there is a strong incentive to lodge early to get your hands on some extra cash courtesy of our tax system if a refund is expected, [but] we want to remind taxpayers that there are added complexities in lodging early, particularly this year due to two new factors at play,” the Institute of Public Accountants (IPA) said in a statement.
“Firstly, Parliament needs to pass the announced increase in the low and middle-income offset which applies for the 2019 income year. Eligible taxpayers can receive up to an extra $530 for singles or $1,080 for a couple.
“[However,] the ATO has stated that it cannot process the higher amount until the law is passed but will be able to automatically amend a return if the law changes after a taxpayer receives their assessment.”
These tax cuts were unveiled as part of the federal budget handed down in April, ahead of the election.
According to the IPA, the second major factor at play this year is the rollout of Single Touch Payroll (STP). Employers with more than 20 employees have been using the ATO’s new mandatory reporting measure since 1 July last year, while it will become mandatory for smaller employers from 1 July this year.
Some smaller employers have already made the transition ahead of the deadline.
As such, the IPA noted that “some employers no longer need to provide a payment summary to employees, as this information can now be accessed via myGov”.
But given this transition, it noted that there is considerable scope for errors to be made in the early part of the process, or that information may be missing altogether.
“The information available in early July may not be accurate until the employer completes a finalisation process. Until this happens, employment income will show a notation ‘tax not ready’,” the IPA said.
The industry body also said that other normal aspects come end of financial year can take some time to process and to then be pre-filled in tax return statements.
“Our advice is that unless you have certainty and completeness around the information used to finalise your return, we are encouraging all taxpayers to rethink lodging returns early this year, especially in light of the above changes,” it said.
More information on the STP rollout for employers can be found in the dedicated My Business webcast, which included the ATO’s assistant commissioner and head of STP, John Shepherd, as well as the My Business Guide to Single Touch Payroll.
Meanwhile, there have been warnings about the factors most likely to attract extra scrutiny by the ATO this year, including claims for work-related clothing and home office expenses.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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