Claiming too early could cost you money.
Claiming too early could cost you money.

Major tax mistakes that could cost you

ONE in five Australians who lodge their tax returns early end up making mistakes and could be costing themselves money, the Australian Taxation Office has warned.

Already 2.2 million Australians have lodged their tax returns since July 1 - a 25 per cent increase on the same time last year.

And the average return so far this year is $2366.

The ATO's assistant commissioner, Karen Foat, said they have already paid out $1.8 billion in returns but many were still be lodged with mistakes.

She said this could result in people "short changing themselves."

"They are making a mistake by missing out on some of the prefill information such as their salary or wages," Ms Foat said.

"By around mid-August all the information is in there so if you are looking for the sweet spot on when to lodge your return we would say mid to late August is ideal."

Ms Foat said this tax time there's many errors that continue to be made by rushing to submit a return.

"This includes things like overclaiming work-related expenses, leaving out some rental income (for investors) or overclaiming your rental expenses," she said.

"We are already seeing high claims for gifts and donations which is fine as long as people have a receipt to support that."

She said if people make errors the ATO could contact them either by phone or letter or via their tax agent if they have engaged one.

For work-related expenses Australians can claim up to $300 and you don't need receipts but Ms Foat said they must be able to explain how they reached that claimed amount.

If it is above this threshold people need to provide receipts.

Ms Foat also said if people are making errors it could result in their return being delayed, they have to provide more documentation or even face penalties including paying money back.

The Tax Institute's tax counsel, Stephanie Caredes, said the ATO's data-matching capabilities were "ever increasing" and it pays to lodge honestly.

"If you find you have made a mistake it's best that you voluntarily tell the ATO first because their data information is getting better and better and chances are they will find it," she said.

"It's preferable for you to be on the front foot."

The ATO said returns are taking anywhere from six business days to two weeks after lodging for Australians to receive their money in their bank accounts.

HOW TO AVOID TAX MISTAKES

1. Don't lodge before all your prefill information is available.

2. Be careful with lodging work-related expenses, errors are common here.

3. Keep all your receipts.

4. Don't claim for something you never paid for.

5. The ATO's enquiry line is 13 28 61 for individuals and the self-help line is 13 28 65.



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