Some clients are electing to lodge their income tax returns early this year for a variety of reasons, including;
- Looking at undertaking a property purchase that requires a lending application. This is generally relevant to individual tax payers who converted from salary and wage to contractor income during the year (i.e RMOs, GP registrars completing fellowship).
- Some business clients whereby financial institutions have requested an additional 12 months of trading.
- Individual clients expecting refunds or have a personal preference to lodge early.
Australia has come a long way when it comes to electronic reporting and integration. No longer are you required to calculate and prepare information such as payslips, interest income, health insurance policies and alike, as organisations and providers are required to report this information directly to the ATO. Unfortunately, these institutions do take time to report, with some needing until August before being ready.
Employers generally have until the 14th July to finalise and submit their annual payroll reconciliation. For many individuals, their PAYG income may be their main source of income. Some individuals may have a range of salary sacrifice and/or allowances they may not be aware of and I would recommend at the very least, that income tax returns commence after these are submitted.
Problems with lodging early
It has always been in my personal experience that whilst clients generally have an idea of what gets included in their tax returns, a majority will oversee a critical income or deduction that they may not have been aware. Some taxpayers may also need investor statements to confirm the nature and tax components of income received.
An early lodgement can prove costly if mistakes are made, including lodgements being delayed by the ATO, having to lodge an amendment and even potential audits when data matching identifies discrepancies.
If you would like to know whether lodging early is right for you, please do not hesitate to reach out to a member of the team.