It’s a new financial year, which means it’s tax time!
About 14 million Australians will be prepping their tax returns over the coming weeks and months.
But don’t rush in – the Australian Taxation Office (ATO) is asking people to hold off submitting their returns until they have all their information.
And changes in the 2023/24 fiscal year mean that many tax returns could be lower this year – with some actually owing the Australian Taxation Office (ATO) money.
Here what you need to know.
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How to claim your tax return?
Before you claim your tax return you first have to lodge your return.
There are three ways to lodge your tax return:
- Lodge online on myTax: This option means you will prepare your own return via your myGov account. Most returns lodged this way are processed within two weeks.
- Lodge via a registered tax agent: A professional tax agent will prepare and lodge your return. This will incur a fee but you can claim that fee back on next year’s tax return.
- Lodge a paper tax return: You can prepare your return on paper and lodge via mail. Most refunds from returns lodged this was will be issued within 50 business days.
By when do I have to file my tax return?
If you are submitting your tax yourself, you must lodge it by Tuesday 31 October.
If a registered tax agent is lodging on your behalf, they will generally have special lodgement schedules and can lodge returns for clients later than 31 October.
But you still need to engage a tax agent before 31 October.
When can I lodge my tax return?
Technically, you can lodge your tax return any time after 1 July and before 31 October.
However, the ATO has warned that rushing to get your return in could end in headaches.
ATO assistant commissioner Tim Loh explained that returns lodged in early July are more likely to be changed by the ATO compared to those lodged later.
“While you can lodge from 1 July, there is a much higher chance that your return will be missing important information if you lodge your return before late July,” Mr Loh said.
“If you forget to include everything, it will slow down the progress of your return, and you’ll likely end up with more work to do down the track,” he said.
The ATO advises that most information from employers, banks, government agencies and health funds will be automatically loaded into tax return by late July.
Advice is to wait until your income statement is marked ‘tax ready’ to lodge your return.
Why is my tax return so low in 2023?
There could be a few reasons your return doesn’t look as robust as in past years, according to the ATO.
- your refund could have been offset against other debt you have
- there could be a difference between the details in your tax return and the prefill information data
- your income and deductions are different from last year.
But the most likely culprit for a low return – or even a tax bill – is the discontinuation of the low and middle income tax offset (LITMO).
Introduced in 2018/19 Budget, the LITMO gave those earning between $37,000 and $126,000 a tax benefit of up to $1500, depending on how much they earned.
Those earning between $40,001 and $90,000 got the full $1500 offset.
The ATO reported that more than 10 million people claimed the LITMO in the 20/21 financial year.
Well, the good times are over – the LITMO ran out on 30 June 2022.
So, if you have a discrepancy of about $1500 in your 22/23 return, the missing LITMO could be the cause.
What can I claim on tax?
There are many work and non-work related expenses that you can claim on your tax return.
Some of these deductions you will need records to claim.
However, according to the ATO, if your total work expenses are $300 or less, you are not required to provide records.
Deductions can include:
- Cars, transport or travel: This is for any travel-related expenses you incur while working. Important to know that from 1 July 2022 the cents per kilometre rate increased to 78 cents. Or you can always use the logbook method.
- Working from home expenses: How you claim WFH costs has changed slightly this year. The fixed rate method allows you to claim 67 cents per WFH hour. Or you could use the actual costs method and claim exactly how much you spent based on bills and receipts. These are now the only two ways to claim WFH expenses.
- Tools, computers and items you use for work: This is a pretty far-reaching category that can include phones, internet expenses and more. But be careful, some of these deductions can fall under the WFH shortcut method.
- Education, training and seminars: This deduction covers any courses, including first aid courses, that you had to undertake because of work.
- Memberships, accreditations, fees and commissions: Union fees, working with children checks, professional memberships and agency fees come under this deduction.
- Meals, entertainment and functions: This one is very strict with what you can and can’t claim, mostly it relates to meals bought during overtime working.
- Personal grooming, health and fitness: Again, a very strict category. It covers any compulsory medical assessment you may have had to undergo for work and if you paid for a COVID-19 test for work purposes.
- Gifts and donations: Most gifts and donations are deductible but they have to be to an organisation that has the status of a deductible gift recipient. This includes any donations to social media fundraisers or crowdfunding. You also must have a record of your donation to claim it as a deduction.
- Investments, insurance and super: There are certain fees you can claim if you’ve got investments. You can also claim a deduction if you made personal super contributions but there are some caveats to watch out for.
- Cost of managing tax affairs: If you engaged a tax agent for last year’s return then you can claim that cost back this year.
There are very strict rules about what you can and can’t claim.
So check out the ATO website for the full details before filling out your tax return
How long does tax return take?
It’ll take on average between two weeks and 50 business days for your return to be processed.
This can depend on which method you lodged your return by.
What does balancing account mean?
A while after you’ve lodged, you might see the phrase ‘balancing account’ when you look at the status of your return in the app or online.
This means that the ATO has the result of your return, and that they’re calculating your refund or bill based on your account balance.
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