Made a mistake on your tax return? Oops! Don’t beat yourself up. There’s no need to panic. Your tax return can be amended.
There are many reasons for tax mistakes. Some of them are out of your control, including a lost or late payment, bank fees or a late employer statement. Other times we’re all just human and mistakes happen. Before you amend your tax return, it’s best to gather a little information to make sure you’re doing the right thing, because when it comes to tax you want to get it right the second time around.
Once you do realise a mistake has been made on your tax return, it’s best to get onto it as soon as possible. The ATO has a window of 2 years for amending your tax return from the date of the original lodgement.
What Is An Amended Tax Return?
An amendment is the act of refiling incorrect information to your tax return that has already been lodged. It’s an opportunity to correct errors that slipped through to reflect your true tax status. Corrections can be made to both income and deductions.
When Do You Need To Correct Your Tax Return?
There are a few reasons why you’d need to amend your tax return:
- You’ve made a mistake
- You need to include additional information
- You’ve forgotten to include information
- You’ve experienced a change in circumstance after lodging
- You need to change your deductions
- The income you’ve declared is incorrect
- You’ve forgotten about a source of income
- You’ve reported gains or losses as income instead of capital gains
- You’ve received fringe benefits and forgotten to declare it as income
- There has been a change of rules and tax law which you’ve been unaware
- Your employer had paid you an allowance and reimbursed you for the expense and you have declared the amount
Pro Tax Tip: The ATO won’t charge a fee for amendment however it’s best to seek the assistance of a tax accountant to lodge an amendment which will incur a fee.
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Why Amend?
The Australian Taxation Office (ATO) uses sophisticated data matching software programs. They’ll know if you’ve made a mistake in many instances. If the mistake is genuine, it’s best to get onto it quickly because there are serious fines and penalties you might incur. Taking the initiative to amend your tax return as soon as you understand you’ve made a mistake is wise. The ATO will also track back years and might even audit you if your errors have been found to be dishonest.
You can amend your tax return through a tax agent or by sending the ATO a letter. You can amend your tax return if you’re an individual Australian or a business.
Pro Tax Tip: Wait until your tax return has been processed before you submit an amendment. This will help with future delays.
What Income Should You Declare?
Some mistakes are made when all income hasn’t been declared. This is often the case when it comes to foreign income, dividends or an insurance payout that was received at the start of the financial year and forgotten by the time a tax return is lodged. All income that should be declared is:
- Employment income – income earned as salary or wages from your job, cash, allowances, fringe benefits and super contributions
- Super pensions and annuities – income streams from your super or a lump sum or stream of payments made by a life insurance company
- Government payments and allowances – you might have been paid certain taxable and non-taxable government payments, pensions and allowances. Even if your payment is non-taxable, they still need to be declared
- Investment income – interest, dividends, rental income and capital gains
- Business, partnership and trusts – income streams from any business no matter the business type
- Foreign and worldwide income – income earned from other countries
- Other income – compensations, insurance payouts, discounted ESS shares, prizes and awards
- Crowdfunding
- Shared economy
- Personal services income
Tax Deductions
Expenses can be made and deducted if you’ve incurred them through the course of earning your income. These deductions are subtracted from your overall income where your tax obligations are then calculated. Common tax deductions are:
- Motor vehicle
- Travel
- Clothing, laundry and cleaning
- Self-education
- Working from home
- Covid-19 tests
- Phone, data, internet
- Tools, equipment and other assets
- Union fees, subscriptions
- Gifts and donations
- Income protection insurance
- Costs of managing your tax affairs
Pro Tax Tip: To claim tax deductions, the expense must be business and not private. You must be out of pocket for them and you must have proof.
Tax Offsets and Rebates
Declaring all of your income may entitle you to certain offsets and government payments to help reduce your tax payable. These are:
- Private health and insurance rebate and offsets
- Australian Government allowances and payments
- Beneficiary tax offset
- Offset for maintaining an invalid or invalid carer
- Low and middle income earners tax offset
- Medical expenses tax offset
- Seniors and pensioner tax offset
- Super-related tax offsets
- Zones and overseas forces tax offset
- Lump sum payment in arrears tax offset
- Foreign income tax offset
The tax you’re obligated to pay is dependent on your residency status, which is different for the ATO than becoming an Australian national citizen. The residency rates for Australian residents for tax purposes is:
Resident tax rates 2022–23
| Taxable income | Tax on this income |
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 – $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
| $180,001 and over | $51,667 plus 45 cents for each $1 over $180,000 |
The above rates do not include the Medicare levy of 2%. There are different rates for foreign residents for taxation purposes, children and working holiday makers.
After Amending
After you’ve declared your amendments, the ATO will review your data. They may contact you or your tax agent to clarify and confirm data. Once the review is complete, the ATO will make the necessary adjustments and you will either be issued with tax payable or an additional tax refund. Tax can be complex. ITP Accounting Professionals have helped Australian individuals and businesses for over 50+ years. There’s not a lot they don’t know about tax. If you need to amend your tax return, seeking the help of a tax professional is advised. Phone 1800 367 487 and chat with a friendly professional today.