Early tax time lodgers cautioned on COVID-19 variables
Early tax time lodgers cautioned given they are chomping at the bit to lodge their tax returns. We are being urged to hold off for at least a few weeks as COVID-19 throws up new variables this tax time.
What is different about this lodgement?
What things to consider before you begin your return
Mr Conway has cautioned taxpayers from lodging before such information is available on the ATO’s pre-fill, a message that the ATO has been broadcasting in the weeks leading up to 1 July.
“Our strong message is to wait for the information to become available before you lodge; otherwise, you may end up with an unexpected tax bill and angst down the track. Discrepancies will create reverse workflow and expose taxpayers to interest and/or penalties,” Mr Conway said.
Those who have lost their employment this year and have received JobSeeker will need to wait for Services Australia to load this information into the pre-fill as this entitlement represents income which is taxable and needs to be added to other income.
“Services Australia does not normally withhold tax, so this may adversely impact on the individual’s overall tax situation. This may turn a refund into an amount payable depending on personal circumstances. Similarly, if the employers have not withheld the proper amount of tax from JobKeeper payments, this, too, can have an impact on the refund amount.
“Another COVID-19-related issue this year is where a sole trader is receiving JobKeeper as an active participant. This represents income and needs to be included as part of their business income. Also, the cash-flow boost is tax-free and can be excluded from business income.”
Likewise, the Tax Institute’s senior advocate, Robyn Jacobson, believes taxpayers will save themselves the trouble of possible amendments if they wait a few weeks before lodging.
“It is not necessarily optimal to lodge your return as soon as 30 June ticks over. This is primarily because third-party information, such as from banks, health insurance providers and public companies that have paid dividends, takes a little while to come through to the ATO,” Ms Jacobson said.
What will happen if you lodge too early?
“If you rush to lodge your tax return early and not all the right information is available, you run the risk of making mistakes or inadvertently omitting income and having to amend your tax return. Why do your tax return twice when you can get it right the first time with a little patience?”
Single Touch Payroll
Employers with 20 or more employees will have until 14 July 2020 to make a finalisation declaration for their Single Touch Payroll data, while employers with 19 or fewer employees will have until 31 July 2020.
Once finalised by employers, the ATO will pre-fill the employee’s income tax return and display the information as “tax ready” in myGov.
“It’s important to check that your employer has finalised the information in your income statement and it is marked as ‘tax ready’ before you lodge,” ATO assistant commissioner Karen Foat said.
“Other information from banks, health funds and government agencies will also be automatically inserted into your tax return. For most people, this will happen by the end of July.
“Lodging once we have included all of your information in your tax return makes it even easier, but if you are lodging before then, make sure the information provided is complete, accurate and up to date to avoid delays or a debt later on.”
We are here to help you
Our team at Gerard Wilkes & Associates are here to help. If you have any questions regarding this article, or would like to discuss your taxation matters further, please contact us at https://www.wilkes.com.au/contact-us/ or call our office 07 5532 1733.
Article Sourced from: Accountantsdaily