Clients knocking on tax agents’ doors for a tax return from today may be better off waiting a few weeks, says the ATO.
With around 160,000 employers now reporting through Single Touch Payroll, covering close to 9 million taxpayers, the ATO has now recommended that taxpayers wait until their employers have finalised their income statements before filing their tax returns.
STP will mean that employers are exempt from providing end-of-year payment summaries, with income statements replacing them and being made accessible through a taxpayer’s myGov account or their tax agent.
Employers will have until 31 July 2019 to make a finalisation declaration for the 2018–19 financial year, with that date to change to 14 July each year subsequently.
“Most employers have until 31 July 2019 to finalise their employees’ income statements, so we strongly encourage taxpayers to wait a few weeks before lodging their tax return,” said ATO assistant commissioner Karen Foat.
“If you lodge your tax return before your income statement is tax-ready, your employer might make changes, and you may need to lodge an amendment. In some cases, additional tax and interest may be payable.”
Taxpayers who have linked their myGov accounts to ATO online services will receive a message when their income statement is tax-ready; for agents this information will be available in prefill reports.
“We know from previous years that the early birds who lodge in the first weeks of July are far more likely to make mistakes or submit incomplete data. That’s why we suggest waiting and letting the ATO do most of the work prefilling your tax return,” Ms Foat said.
While clients can still lodge early this year, several industry experts have also previously warned against doing so, noting the STP changes as well as the government’s proposed tax cuts.
Treasury Laws Amendment (Tax Relief So Working Australians Keep More of Their Money) Bill has been tabled for introduction into the Senate this week, and if it passes, will see the end-of-year rebate for low and middle-income earners double from $530 to $1,080.
The ATO has previously said they will automatically amend assessments to add additional credits should the bill be passed after they process taxpayers’ 2018–19 tax returns.
“Our advice is that unless you have certainty and completeness around the information used to finalise your return, we are encouraging all taxpayers to rethink lodging returns early this year especially in light of the above changes,” said the Institute of Public Accountants’ general manager of technical policy, Tony Greco.
“Consistent with prior years, third-party data such as dividends, interest, share disposals etc. is progressively uploaded onto the ATO systems during the month, so it normally takes some time for the prefill information to be finalised.
“The ATO has the right to auto-amend a return, which it has been doing for discrepancies, but interest and penalties can be applied by the ATO.”
If you have any questions or would like advice in relation to your tax returns feel free to contact Darren at Darren@walsheclancyoneill.com.au