Data and Analytics Generating Faster Refunds This Tax Time

A record number of tax returns have been pre-filled and mistakes corrected through the use of analytics and data-matching technology, helping deliver faster returns this tax time.

“In the first two months of Tax Time, over $11.9 billion has been refunded to taxpayers and more than $53 million in errors has been detected and corrected before the refunds issue,” Assistant Commissioner Kath Anderson said.

“We want to make it easy for taxpayers and agents to get it right, and have already prefilled over 80 million pieces of data from, banks, employers, health funds and government agencies. But unfortunately some people are still getting it wrong,” she said.

“Our investment in advanced analytics is allowing us to closely scrutinise more returns than ever before, and make immediate adjustments where taxpayers have made a mistake. In the first half of tax time, the ATO’s analytics and compliance models automatically adjusted more than 112,000 tax returns to correct mistakes in returns, totalling more than $53 million.

“We have processed a record number of tax returns so far this tax time, with just under 5.8 million returns lodged in July and August. Many of these returns have refunds attached to them, totalling almost than $11.9 billion, which is an increase of $270 million compared to this time last year,” Ms Anderson said.

“Young people seem to be getting in early, with 17% of returns coming from the 18 to 24 year olds, with the majority using myTax to do so. As expected, the larger states are leading the way, with New South Wales at 1.7 million lodgements, followed by Victoria at almost 1.4 million and Queensland just over 1.2 million,” said Ms Anderson. “We have not analysed the reason at this stage, but we have seen more Queenslanders lodging earlier.”

While securing a fast refund is a high priority for many taxpayers, the ATO wants taxpayers and agents to get it right, and is using analytics and data-matching to detect errors like missing income and over-claimed deductions.

“Most of the income adjustments we are making at the moment are for simple mistakes, like leaving out bank interest or salary and wages. But for some, it seems their priority was on generating a refund rather than getting it right, as they have deliberately ignored the pre-fill information that was available at the time of lodgement,” said Ms Anderson.

“We are happy to see that so many taxpayers are confident to lodge early. However we are seeing some people continue to make simple mistakes or try to game the system to secure a refund. Our message to taxpayers is simple – take care this tax time and use the data we have provided.”

“We are also seeing some taxpayers over-claiming deductions, with insurance premiums emerging as a new area where taxpayers need assistance. Just to be clear, premiums for income protection insurance are tax deductible, but premiums for other insurances like life, permanent disability and trauma are not,” she said.

According to Ms Anderson, the ATO’s data matching activities help ensure a level playing field for all, protecting honest taxpayers by detecting those who have not done the right thing.

“Obviously the best way to avoid issues with your return is to declare all your income and only claim deductions you are entitled to, no more, no less. But if you’re planning to bend the rules and deliberately leave out income, remember that our analytics and data matching is likely to pick it up and there can be penalties.

“The amount of the penalty will depend on things like whether you waited for the ATO or fixed it yourself, and whether you meant to do the wrong thing. Generally penalties range between 25% and 75% so it is definitely best to avoid them,” she said.

Anyone who realises they have made a mistake or left something out, shouldn’t panic, you can lodge an amendment online or via your agent. The important thing is to get onto it as soon as you can so that you minimise any penalties and interest.

To check pre-fill availability visit: ato.gov.au/prefill

Tax Time by the numbers

  • 5,775,000 taxpayers or their agents lodged a tax return in July and August
  • 977,000 (17%) were aged between 18 and 24 years old
  • 2,972,000 taxpayer were male
  • almost 5,155,000 refunds totalling in excess of $11.9 billion

State/Territory 2017-18 income tax returns

  • ACT 105,000
  • NSW 1,725,000
  • NT 65,000
  • Other 35,000
  • QLD 1,235,000
  • SA 405,000
  • TAS 145,000
  • VIC 1,395,000
  • WA 660,000
  • All 5,775,000

Lodged and processed by 31 August 2018. Rounded to the nearest 5,000.