Yahoo Finance 3 tax experts reveal and answer your top FAQs
Got a burning question for a tax agent?
Chances are, they’ve probably answered it before – over and over again.
‘Where’s my refund?’, ‘will the ATO catch me if I leave out income?’ and ‘how do I increase my tax return?’ are questions that experts say they hear every time tax season rolls around.
Read more:
Yahoo Finance asked three tax experts to reveal the most-commonly asked questions at tax time, and what their answers are:
Q: ‘What’s happened to my refund?’
Once you’ve lodged your tax return, this question is bound to be at the tip of your tongue.
“The ATO says it aims to start [the] processing of 2020–21 tax returns on 7 July 2021 and expects to start paying refunds from 16 July 2021,” said H&R Block director of tax communications Mark Chapman.
So it’s unlikely you’ll see your refund before the 16th, he added.
“Thereafter, the ATO says it aims to finalise the majority of electronically lodged tax returns within 12 business days of receipt, although in reality many refunds will be issued much quicker.
“If you haven’t received your refund within 12 business days, it may be that there are problems with your return, such as a data discrepancy which the ATO needs to check up on.”
Q: ‘Can I do my tax return myself?’
Aussies whose tax return is really straightforward – no complex deductions or claims, and just one source of income – may prefer to do their tax return themselves.
But other Aussies – business owners, especially – may want a tax professional’s help to stay on the safe side or find legal ways to maximise their refund.
Read more: Tax 2021: Should I DIY, or get a tax agent?
“There’s a reason 74 per cent of Australians use a tax agent to prepare their tax return; tax is complicated! Get your tax return wrong and the comeback is on you, either with a lower refund or ATO penalties,” said Chapman.
“Most people find it far less stressful to simply pass on all their information to a tax agent and leave it to the agent to complete their return, safe in the knowledge that the return will be accurate and complete. An experienced agent will usually be good at sniffing out those obscure tax deductions you didn’t know you could claim so they can often pay for themselves several times over.
“Best of all, the tax agent’s fee (which is on average about $139 to $149 at H&R Block) is also tax deductible.”
Q: ‘How can I make my tax return bigger?’
“Your tax return will depend on your taxable income and the deductions you make against it. When looking to make tax deductions, you’re looking to claim work-related expenses, such as tools or equipment you’ve bought in order to do your work,” said Tax Institute general manager of tax policy and advocacy, Scott Treatt.
As always with any claims you try to make, the key is to have proof that these expenses are linked to earning income, and you have a record through receipts.
“This year, work from home expenses are going to play a big part in people’s tax deductions,” he added.
“There are three methods for claiming these expenses for the 2020/21 financial year: the shortcut method, the fixed rate method, and the actual cost route.
“While you should be claiming everything that’s a legitimate tax deduction, be aware that the ATO does watch for incorrect or overblown deductions and you can wind up in hot water if you make claims you shouldn’t.”
Be aware of what a deduction is so you can track it throughout the year and you can avoid the tax-time scramble to pull out all the receipts, Treatt said. “Your tax agent can help you understand and track this throughout the year, not just when it comes time to file a tax return.”
Q: Why is this so complicated?
Because our tax system is complex, Treatt explained.
“If your finances are complex enough that you’re working with a tax agent, there’s a good chance that you need to keep an eye on a number of different obligations, rules and regulations to ensure you’re getting it right.”
Bigger picture, some tax reform needs to happen to streamline the tax system and make it more simpler and efficient, Treatt believes.
“But for individuals at tax time, the best thing to do is ensure you’re working with a reputable tax agent with up-to-date skills and knowledge of tax legislation.”
Q: ‘What are the chances of the ATO finding out if I leave income out?’
“The ATO can see around corners when it comes to identifying taxpayers’ income,” said Elinor Kasapidis, senior manager of tax policy at CPA Australia.
The tax office gets its information from a huge range of sources, including stock change platforms as well as share economy platforms like Uber, Airtasker and Airbnb.
“It matches this information against tax returns to check for inconsistencies. It’s not worth risking interest and penalties,” said Kasapidis.
“Do yourself a favour, only claim what you’re entitled to and make sure you have good records to back it up.”
Q: ‘How much will I get back in my refund?’
There’s no surprise Aussies are keen to get a modest cash injection in their pockets come tax time.
But Kasapidis’ answer to this question is: “it depends!”
Don’t expect to get money back, she said – after all, you may even wind up finding you owe the taxman money.
“Many taxpayers receive no or only a small refund. The size of your refund will vary depending on factors such as pay-as-you-go amounts, type of income and eligible deductions.
“Your tax agent can help make sure you’re claiming everything you’re entitled to, so you pay the right amount of tax and not too much.”
Have a tax question you'd like an expert to answer? Let us know at editor.australia@yahoofinance.com.
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.
