Nick Bruining: Clock is ticking to sort tax ahead of October 31 deadline

Beads of sweat on the brow, trouble sleeping at night, or have you declined a slice of your favourite cake while snapping at your loved ones?

These might be signs that someone’s unwell, or it could be a sign of someone who’s just realised that tax returns are due by October 31 — that’s this Thursday!

Things only get worse if it’s been a couple of years since you last went near the Australian Taxation Office to lodge your return.

That anxiety can be easily alleviated when the facts are known. The remedy for many, is an easy fix.

While the ATO has an October 31 deadline, it also understands that sometimes things aren’t quite ready or you need a bit of extra time. A call to 13 28 60 will generally see you granted an extension.

Short of using a tax agent and paying fees, the easiest and cheapest way for most of us to lodge a return is to do it yourself using my.Gov.au.

If you do plan to appoint a tax agent to help you, you will need to make that appointment before the October 31 deadline. Once done, you will fall into and become part of their “lodgement program”. This allows registered tax agents to work through their client base and lodge client tax returns over, typically, a six-month period.

You can also “disconnect” from your existing tax agent and try to do it yourself. Indeed, you could give it a go, and if it’s too hard, stick with your current tax agent arrangements. Either way, it would be nice to let the agent know what you’re up to.

Once you register your myGov account, you need to link the ATO “service” to the myGov portal. That can be done online, providing you have the necessary source documentation on hand to answer two tax-related questions.

This documentation includes a bank statement for an account that was used to receive a previous tax refund or paid you interest. A previous ATO notice of assessment, a share dividend statement, a super fund statement, an employer PAYG summary or even a Centrelink payment summary will also do.

Once linked, you’ll be amazed at what information the tax office has in your file.

Apart from the personal and tax details, you’ll find comprehensive information about your superannuation including contribution details, performance information and information about contribution caps.

Throughout the site, there are little pop-up answers to common questions.

Under the income tax tab, it will tell you what tax returns are due.

If you’ve been sweating over missed returns for the past few years, they will appear but, critically, you can complete most of your overdue returns online in the same way you can do this year’s return.

When you begin the interactive process, you’ll discover that most of the data is already loaded into the system for you.

That pre-filled information includes all of your wage data, bank interest, share dividends, franking credits and other payments you’ve received, including Centrelink benefits. If you’ve previously included investments like a negatively geared property, that will be there as well, though you will need to load in the information such as rental income and deductible expenses.

The system looks at your occupation and can then suggest common tax deductions for that occupation. Just remember, however, that even if the suggestions are made, you can only claim the deduction if you have actually made the payment and have proof to show that you did.

Health insurance data is also pre-loaded into the system.

Once you’ve completed the return, the system shows you a summary of what is about to be lodged and an estimate of your tax refund or debt.

From there, you simply click “submit” and the job’s done. Many users report tax refunds hit their accounts within 10 days.

People with relatively simple tax affairs and who know their way around a keyboard and mouse typically take about 20 minutes to complete the entire exercise.

If you are catching up with earlier returns, the same process applies.

If, in this case, you are whacked with a penalty for late lodgement by the ATO’s computer systems, it is sometimes worth a call to the ATO to explain why you were late. On many occasions, they’ll waive the penalty and interest but not the tax you owe. That will still need to be paid.

If you wait for the ATO to come chasing you, your negotiation options will diminish rapidly.

Nick Bruining is an independent financial adviser and a member of the Certified Independent Financial Advisers Association