Why 340,000 people won’t be getting back their tax returns

The Australian Taxation Office had a whopping 740,000 tax returns claimed in July – which is an all-time record.

However ATO is urging taxpayers to make sure they avoid these three big mistakes that have been spotted in early tax returns over the last fortnight.

“This is up from just over 100,000 online lodgements across our channels on 1 July 2019,” ATO assistant commissioner Karen Foat said.

A whopping 1.7 million lodgements have already been received in the first two weeks of July.

“More than $1 billion has hit around 457,000 taxpayers bank accounts. Most returns that are lodged electronically are processed within two weeks so refunds for the first returns lodged will continue to be issued into the first half of next week.”

However, there are three common mistakes the tax office is spotting in early lodgements which means many Australians are seeing a delayed tax return.

“While we’re pleased that many early lodgers are getting it right, there are some trends in the issues we’ve been seeing,” said Foat.

“One thing we don’t want to see is a record-breaking number of easily avoidable errors. These errors slow down returns or might lead to an unexpected debt down the track.”

1. Do not forget to include all sources of income

The ATO says that just over 20 per cent of the early lodgers – 340,000 people – will not receive their refunds in the first batch paid out because they are forgetting to enter all of their sources of income.

While items like job income, bank interest and health insurance numbers are typically already sent to the ATO electronically and therefore are already in the lodgement forms – there are manual income sources that some taxpayers are forgetting to include.

“We are asking taxpayers to add any amounts that aren’t automatically included to your return. This includes cash wages, foreign sourced income, or even gains from cryptocurrency,” Foat said.

“Leaving out income can delay your return, particularly when we receive those income details from third parties whilst we are processing your return.”

Foat says that even the auto-filled income data should be sanity-checked by the taxpayer before lodgment.

“For most people this information is ready by the end of July. If you’re lodging early, it’s crucial you check this information is there and manually add it if it’s not.”

2. Be careful what you claim as working from home

Millions of Aussies are using the coronavirus restrictions which have pushed many employees into working from home, to their advantage.

Foat is urging taxpayers to not double dip when claiming working-from-home expenses.

“It’s important to remember that if you’re claiming under the working from home shortcut method for 1 March–30 June 2020, you can’t claim any other expenses for working from home for that period,” said Foat.

“If you want to specifically claim the depreciation of big-ticket items like laptops or desks, you can use one of the existing methods, but you can’t double-dip and claim under the shortcut method as well.”

Foat is advising Aussies not to avoid the COVID-19 shortcut hourly rate method.

“If you want to claim under one of the existing methods, it’s really important that you either work through the detailed guidance on our website or talk to your tax agent because it is complicated and it’s an area that we see a lot of people making mistakes.”

3. Reducing costs can cost you your tax return

While taxpayers are claiming extra expenses due to the coronavirus lockdown, including remote working costs – ATO has noticed many are forgetting to reduce the cost of expenses that have gone down for the exact same reason.

“We know that more people have been working from home, working reduced hours or unfortunately not working at all,” Foat said.

“So, if you aren’t travelling for work, you can’t claim travel expenses. If you aren’t wearing your work uniform, you can’t claim laundry expenses.”