Accountants Daily 17 July 2020
ATO records ‘biggest 1 July ever’ with 640% spike
Over 1.7 million Australians have now lodged their tax returns in the first two weeks of the new financial year, leading the ATO to issue a cautionary note on trending mistakes with early lodgements.
The ATO has now seen its “biggest 1 July ever”, with over 740,000 online lodgements on the day, up from just 100,000 lodgements on 1 July 2019.
The spike in lodgements, which included income tax returns, early release of super and JobKeeper applications, likely contributed to the ATO’s online systems crashing on the first day of the new financial year.
The first two weeks of tax time has now seen 1.7 million individual tax returns lodged, a 12 per cent increase on the same period last year.
The average refund amount this year stands at $2,365.
“More than $1 billion will have hit 457,000 taxpayers’ bank accounts,” said ATO assistant commissioner Karen Foat.
“Most returns that are lodged electronically are processed within two weeks, so refunds for the first returns lodged will continue to be issued into the first half of next week.”
The surge in early lodgements this year builds on top of last year’s spike when taxpayers sought to secure their low and middle-income tax offset of up to $1,080.
Tax experts had anticipated another early rush this year as taxpayers looked for a cash injection through their refunds amid the COVID-19 crisis, with the Australian Bureau of Statistics now reporting that 992,300 Australians are now formally unemployed.
However, the ATO has urged early lodgers to take care in preparing their returns, with early analysis revealing three trending mistakes.
The first issue includes claiming multiple working-from-home methods for the same period, with some taxpayers accidentally or deliberately confusing between the ATO’s recently introduced 80 cents shortcut method and its standard 52 cents fixed-rate and actual cost method.
“It’s important to remember that if you’re claiming under the working-from-home shortcut method for 1 March to 30 June 2020, you can’t claim any other expenses for working from home for that period,” Ms Foat said.
“If you want to specifically claim the depreciation of big-ticket items like laptops or desks, you can use one of the existing methods, but you can’t double-dip and claim under the shortcut method as well.
“We’ve already seen a number of people calling to advise that they have made a mistake in their working-from-home claims and seeking to amend their returns.”
The second issue the ATO has noticed so far is where taxpayers simply copy and paste their deductions from the year before, failing to account for a reduction in claims due to COVID-19.
“One concerning trend we’re seeing is people increasing deductions where they’ve spent more, like working from home, but forgetting to reduce claims in areas they have cut spending,” Ms Foat said.
“We know that more people have been working from home, working reduced hours or, unfortunately, not working at all. So, if you aren’t travelling for work, you can’t claim travel expenses. If you aren’t wearing your work uniform, you can’t claim laundry expenses.”
The final issue that the ATO has noticed with early lodgements is the failure to report all income, with prefill information unlikely to be ready so early into the new financial year.
“Unfortunately, we can confirm that approximately one in five people who lodged early won’t be getting their refunds in the first batches out because they didn’t take the time to include this income,” Ms Foat said.
“While we try to include as much as possible, we are asking taxpayers to add any amounts that aren’t automatically included to your return. This includes cash wages, foreign-sourced income, or even gains from cryptocurrency.
“If you’re lodging early, it’s crucial you check this information is there and manually add it if it’s not.”