In July and August, close to 5.8 million tax returns were lodged by either tax agents or by taxpayers themselves, with over $11.9 billion in refunds processed, $270 million more compared to the same time period last year.
However, according to ATO commissioner Kath Anderson, the tax office had to correct more than 112,000 tax returns, totalling more than $53 million.
“Our investment in advanced analytics is allowing us to closely scrutinise more returns than ever before, and make immediate adjustments where taxpayers have made a mistake. In the first half of tax time, the ATO’s analytics and compliance models automatically adjusted more than 112,000 tax returns to correct mistakes in returns, totalling more than $53 million,” Ms Anderson said.
This is the first full year where the ATO has applied its analytics tools, with an ATO spokesperson telling Accountants Daily that it was under development and testing in 2017/18 and was not in use for the same period.
However, when the tool did come into use, it corrected 53,245 returns totalling a revenue adjustment of $39.9 million across the entire tax time 2017 period.
According to Ms Anderson, most of the adjustments were “simple mistakes”, including not declaring all income and over-claiming deductions.
“Most of the income adjustments we are making at the moment are for simple mistakes, like leaving out bank interest or salary and wages. But for some, it seems their priority was on generating a refund rather than getting it right, as they have deliberately ignored the pre-fill information that was available at the time of lodgement,” Ms Anderson said.
“We are also seeing some taxpayers over-claiming deductions, with insurance premiums emerging as a new area where taxpayers need assistance. Just to be clear, premiums for income protection insurance are tax-deductible, but premiums for other insurances like life, permanent disability and trauma are not.
“We are happy to see that so many taxpayers are confident to lodge early. However, we are seeing some people continue to make simple mistakes or try to game the system to secure a refund.”
As expected, the larger states led the way with lodgements, with New South Wales on top with 1.7 million lodgements, followed by Victoria with 1.4 million and Queensland with 1.2 million.
The Northern Territory rounded off the bottom with 65,000 lodgements, followed by the Australian Capital Territory with 105,000 and Tasmania with 145,000.