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Thousands required adjustment due to taxpayers jumping the gun on lodgements or changing prefills.
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180k July returns needed fixing, says ATO
22 August 2022
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10 minute read
More than 180,000 individual returns had to be adjusted by the ATO in July after taxpayers ignored advice to wait for prefilled information or changed it before lodging.
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The result – 4 per cent of the 4.5 million returns filed in the month – meant 12,000 returns had to undergo manual review by a compliance officer while 170,000 had been amended before a notice of assessment could be issued.
“We continue to see clients lodging early in tax time before government allowances and payments data is available in prefill,” the ATO said. “We also observe clients adjusting or removing prefilled amounts they don’t recognise or believe the income is non-taxable.”
“Where we discover a discrepancy or error, our preferred approach is to correct this before issuing a notice of assessment to support clients and their advisers and avoid future compliance interaction, debt, interest or penalty.”
In the run-up to July, the ATO urged taxpayers and agents to wait for prefill information – collected from employers, banks and government departments –before lodging but it has allowed taxpayers the option of filing early rather than moving the date.
The general manager of technical policy at IPA, Tony Greco, said the low and middle income tax offset (LMITO) meant there was an incentive for many to jump the gun.
“With the government extending and upsizing the LMITO for one more year there is money on the table,” he said. “Adding to this are cost-of-living pressures so we can understand the incentive to lodge early,” Mr Greco said.
Nevertheless he said “it’s a worry when taxpayers manually adjust or removed prefilled amounts. Our tax system relies on self-assessment, so the onus is on the taxpayer.”
While the ATO said most prefill data was available by the end of July, Mr Greco said some taxpayers would still be waiting.
“For example, tax summary data for managed investments may not materialise until late August, September or even October so if you have these types of investments you need to wait,” Mr Greco said.
“A lot of younger people have gravitated to EFTs for the first time and do not quite understand the income tax consequences of such investments.
“Taxpayers need to understand that the ATO can still amend returns after NOA if discrepancies appear later due to timing around when they receive pre-fill data so adjustments will be on-going.”
On the adjustments already made during July, the ATO said the most common errors or omissions concerned government allowances and payments, which accounted for 39 per cent of adjusted returns.
Another problem was clients who lodged before their employer finalised their income data and it became available as prefill.
“This can impact clients who have more than one employer and receive a mix of income statements and payment summaries with many not realising some of their income is missing,” the ATO said.
“Approximately 13 per cent of adjusted returns related to employment income and withholding errors or omissions.”
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