The Australian Taxation Office (ATO) has reportedly already paid out a record $5.3 billion in tax returns as Australians rush to lodge for the first post-pandemic financial year.
The ATO says that if you’ve been putting off lodging your tax return for this year, then now is the time to do it.
“A lot of people’s pre-fill information has arrived,” ATO assistant commissioner Tim Loh told The New Daily.
“It’s going to make it really easy and simple for people to lodge.”
Read: ATO advises not to lodge your tax return before this date
He also revealed that the ATO had processed more than 2.1 million claims already and had refunded a record $5.3 billion to Australian taxpayers. The 2020-21 financial year was the first to bear the full force of the COVID-19 pandemic, with many Australians experiencing reduced hours, job losses and earning less money.
The ATO says this year’s average return is an impressive $2494.
“People are in lockdown – they’ve got time on their hands and they need money,” Mr Loh says.
Apart from the pandemic having an impact on income, tax cuts have been brought forward by the federal government in order to stimulate the economy. Tax experts say that this means most taxpayers can expect to recover some of the tax paid in the first half of 2020-21.
“Taxpayers earning up to $120,000 a year will be taxed $2430 less than they would have under the previous tax rates, plus they will receive an extra $180 for the [reinstated] low-to-middle income tax offset,” chartered accountant Adrian Raftery told The Age.
Read: ATO issues warning for those copying and pasting tax returns
So, what are Australians doing with their windfalls?
Research from business software firm MYOB showed that a quarter of Australians intend to use their returns to pay down debt or outstanding bills.
“This has been a year like no other and many Australians will be in a different financial position to where they expected to be 12 months ago,” says MYOB economist Jon Manning.
“Twenty-three per cent plan to invest their refund, which may be a sign Australians are battening down the hatches.
“Unsurprisingly, given reduced incomes and uncertainty around travel, only 10 per cent intend to pay for a holiday.”
According to MYOB, the top five ways people plan to spend their refunds are:
- use it to catch up on bills (25 per cent)
- invest it (23 per cent)
- nothing, it’s not usually anything much (16 per cent)
- supplement income lost as a result of COVID-19 (13 per cent)
- pay for a holiday (10 per cent).
Paying a bit extra into your super fund could also be a shrewd move in the 2021-22 financial year, as would taking full advantage of the federal government’s superannuation co-contribution.
Read: How retirees can maximise their tax return
“If you earn less than $41,112 this financial year, you can put $1000 of after-tax money into super and the government will co-contribute $500. People earning up to $56,112 can still get some form of co-contribution,” MBA financial strategists director Darren James told The Australian.
If you haven’t yet lodged your return, then ensure you don’t go crazy on your working-from-home (WFH) deductions as the ATO says it will be paying closer attention to those claims this year. Claim only for the portion of bills specifically related to your work.
“If I was an ATO auditor and was looking at someone’s claims, an absolute red flag would be them claiming 100 per cent of internet or mobile [phone] bills, because there is a private portion for them – unless they have a second phone for purely personal purposes,” Mr Raftery says.
The ATO says it has made WFH deductions more streamlined this year by extending its ‘shortcut method’ of calculating those expenses. This method involves multiplying the total number of hours by 80 cents. This works out to about $1660 for anyone working a 40-hour week from home across the whole year.
Have you lodged your tax return yet? Did you receive a bigger return than usual? Was anything queried? Share your experience in the comments section below.
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