Tax time is here. This is what you need to watch for this year

The October 31 deadline might feel far off still, but tax experts are warning now is the time to make sure your return is shipshape – at the risk of hefty penalties.

H&R Block director of tax communications Mark Chapman says there are many things people can overlook or forget when filing, especially if they’re relying on pre-filled information and lodging their own return online.

People who register with a tax agent can often take advantage of a later lodgement date, but it’s recommended they contact the agent first to make sure.

“So, if you’ve been putting your return off, now is the time to deal with it,” he said.

“But don’t let the deadline encourage you to rush.”

Those who don’t lodge on time are likely to receive a failure to lodge penalty.

The ATO will notify those unfortunates in writing and provide a payment deadline.

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Penalties for a late tax return this year will come to a $364 fine for every 28 days the document is due, with up to five of those penalty units in total, for a maximum of $1820.

Hefty penalties also apply for supplying false or misleading tax information, which range from 25 per cent to 75 per cent of the shortfall amount.

One of the most important things to do, Chapman said, was to take care that all figures were correct, even for pre-filled information.

“I’d suggest taxpayers do one final sweep of both sides of the return – income and deductions,” Chapman said.

“First, check that all your income is there. Compare the pre-filled information against your own records.

“Look particularly for bank interest, dividends, distributions, government payments and any income from investments, rentals, foreign sources or side hustles.“

But people also need to be meticulous with their deductions.

“The basic rule is that you generally need to have incurred the expense yourself, it needs to relate to earning your income, and you need appropriate records to substantiate it,” he said.

“Where an expense is partly private, only the work-related portion is generally deductible.“

Taxpayers should also not file for the proposed $1000 standard deduction laid out in this year’s financial budget, as it doesn’t kick in until 2026-27.

“The ATO has specifically warned taxpayers about that misconception,” Chapman said.

Even a “straightforward” tax return can tip up the careless filer.

“A return can look very simple if somebody has one employer and a handful of deductions, but increasingly taxpayers have financial activities outside their main job,” Chapman said.

“Someone might have bank interest, dividends or shares, cryptocurrency transactions, a side hustle, online sales, foreign investments, rental income or income earned through digital platforms.“

He warned that even “relatively small amounts” can affect tax and need to be accounted for.

“Capital gains are another common complication. Someone who sold shares, cryptocurrency or an investment property during the year may need to calculate a capital gain or loss rather than simply entering the amount they received,” Chapman said.

“Personal super contributions can also require extra care. If you’re claiming a deduction for personal contributions, for example, you generally need to give your super fund a valid notice of intent and receive the fund’s acknowledgement.“

Ultimately, Chapman said, at this point in time taxpayers should focus on checking their return properly, rather than rushing it through at the last minute, or striving to get it in early.

“Most importantly, remember that pressing ‘submit’ doesn’t transfer responsibility for the return to the ATO,” he said.

“The taxpayer is ultimately responsible for making sure the income is complete, the deductions are legitimate and the figures are correct.”

The information provided on this website is general in nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.