Tax time is a stressful period for many Australians. Even seemingly simple tax returns can escalate into a madcap scramble through personal records to make sure everything is in order. Is this really any surprise, given that the complete Income Tax Assessment Act 1997 comes in at over 5000 pages?
But even without all the nitty-gritty of legislation, there are plenty of ways that you can negatively affect your tax return. Here are our top three problems people come across when lodging their tax returns that don’t revolve around tax rules.
Lodging too early
For those super-organised among us, when July 1 comes around you just can’t wait to get stuck into your tax. The sooner you lodge it, the sooner you receive your return, right? Unfortunately, this level of preparedness isn’t always a good thing. It takes time for all your information to be sent to the ATO, and if you lodge too early you can miss important information.
If you’re an employee using Pay As You Go (PAYG) withholding, then you’ll have to wait for your payment summary not only to appear in your letterbox, but also within the ATO’s system if you are relying on pre filled information from the Tax Office. Investments are another area that require patience, with managed funds often not completing their paperwork until September.
Lastly, for those not in a tax withholding arrangement, you’re probably looking at a tax bill. Lodging early means you’ll have to pay that bill sooner. By deferring lodgement closer to the due date, you can save those opportunity costs by having the money in hand for longer.
Using myTax for complex returns
The ATO has done marvellous things regarding lodgement your own tax return. Their online platform, myTax, can make the whole process much simpler – if you have a simple tax return. When life starts to get more complicated, whether through investments, superannuation, multiple income streams or business ownership, you may still be tempted to lodge online, especially if you have done so in the past.
Unfortunately, the more complex your financial situation, the more likely it is that you’ll make a mistake. After all, you only do it once a year, so you’ve most likely forgotten important parts of the process. Missing information, incorrect calculations or using the wrong figure in a calculation can end up costing you much more than a registered tax agent’s fee.
Forgetting about superannuation
Tax is complicated enough without adding superannuation into the mix. However, if you’re not looking at the whole picture then you can be significantly disadvantaged. When you make a concessional superannuation contribution out of your own pocket, you are entitled to a tax deduction, but you can only claim this deduction by submitting a Notice of intent to claim or vary a deduction for personal super contributions form (NAT 71121). And this must be completed prior to lodgement.
In a similar vein, if you own a business with employees then make sure you pay your superannuation obligations well before the due date. Fail to do so and you can be hit with penalties and interest, but that aside if you don’t pay on time you can miss out on the tax deduction entirely if you are electing payments to reduce your liability for superannuation guarantee charge.
Just remember that there’s more to tax than just the numbers. How and when you lodge your tax can have as big an impact on your return. Keep these tips in mind to make sure you get the most out of your tax this financial year.
Article Source: S.M.H