ATO receives record number of tax returns

Assistant commissioner Karen Foat noted that despite needing to process a record number of tax returns, tax refunds have begun arriving in bank accounts.

“We saw the biggest 1 July ever, with ATO staff hard at work to ensure we could receive over 740,000 online lodgments on the day, ranging from income tax returns, to early release of super and JobKeeper applications. This is up from just over 100,000 online lodgments across our channels on 1 July 2019,” Ms Foat said.

“More than $1 billion has hit around 457,000 taxpayers bank accounts. 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.”

Taxpayers wanting to check the progress of their return can do so by logging onto myGov and clicking through to the ATO or contacting their registered tax agent.

“So far, we’re looking at a record-breaking tax time in terms of lodgement numbers, but one thing we don’t want to see is a record-breaking number of easily avoidable errors. These errors slow down returns or might lead to an unexpected debt down the track,” Ms Foat said.

“While we’re pleased that many early lodgers are getting it right, there are some trends in the issues we’ve been seeing.”

Top 3 lodgment issues for tax time 2020

Claiming multiple working from home methods for the same period

Ms Foat noted that the ATO has already seen some taxpayers claiming working from home expenses under multiple methods either accidentally or deliberately.

"It’s important to remember that if you’re claiming under the working from home shortcut method for 1 March–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.”

She explained that the 80 cents per hour short cut method was developed to make things easy for taxpayers this year and takes into account all working from home costs such as electricity, depreciation on office furniture and laptops and phone, internet and stationery costs.

"It’s an all-inclusive rate so you can’t claim any other working from home expenses if you use it,” Ms Foat said.

“If you want to claim under one of the existing methods, it’s really important that you either work through the detailed guidance on our website or talk to your tax agent because it is complicated and it’s an area that we see a lot of people making mistakes.”

The ATO is also receiving a lot of calls from people not sure where to claim their working from home expenses. To claim these amounts, Ms Foat advised taxpayers to include them at ‘other work related expenses’, and if using the 80 cents per hour short-cut method, to include ‘COVID-hourly rate’ in the description.

Copying and pasting last year’s deductions

One concerning trend the ATO is 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.

“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". 

Forgetting to include some income

“The most common mistake we see with early lodgers is forgetting to report all their income,” Ms Foat said.

“We automatically include income information in your return from employers, banks, private health insurers, and government agencies. For most people this information is ready by the end of July. If you’re lodging early, it’s crucial you check this information is there and manually add it if it’s not.”

While the ATO tries to include as much as possible, it is asking taxpayers to add any amounts that aren’t automatically included to their return. This includes cash wages, foreign sourced income, or even gains from cryptocurrency.

“Leaving out income can delay your return, particularly when we receive those income details from third parties whilst we are processing your return. 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.

Working from home shortcut extended to 30 September 2020

As working from home due to COVID-19 has continued for some people into the new financial year, the ATO is reassuring taxpayers that the short cut method of 80 cents per hour will continue to be available to work out your claims until 30 September 2020.

More information on the shortcut method is available on the ATO's website at ato.gov.au/WFH