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According to CPA Australia, the largest accounting organization in the nation, filing returns too early is one of the most significant and frequent errors made by taxpayers.
For instance, ATO statistics from last year indicate that around three million individuals had submitted their tax returns by July 23, which increased to 5.8 million by August 20.
However, Jenny Wong, the tax lead at CPA Australia, advised taxpayers to spend time collecting evidence of their work-related expenses in the upcoming weeks and to wait for the ATO to pre-fill their data before submitting their returns.
“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,” she said.
“Firing the starting pistol on your tax return too quickly means you could end up shooting yourself in the foot.”
Wong said it was common for people who lodged early returns to end up having to amend them later.
She also advised people to avoid another common mistake, and not simply copy their previous year’s claims.
“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 suggested extra work travel and equipment for new jobs as potential examples.
“The ATO has a comprehensive guide to industry and occupation types,” Wong said.
“We strongly advise against using AI advice when preparing your tax return.”
CPA Australia also encouraged taxpayers to consider seeking professional advice with their returns, especially if they had complex finances and earning activities such as owning rental properties and crypto assets.
This cost is itself tax deductible.
But make sure if you do claim something, you have the evidence for it, whether working from home or not – and don’t exaggerate.
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“Getting your tax return right is your responsibility,” Wong 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.”
CPA Australia’s top tax tips
- 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.
