It is good news for many Aussie taxpayers as the ATO has disbursed over $5.3 billion in tax refunds in July. With over 2.1 million recipients, it brings the average refund to about $2,490. With the new financial year only having recently started, it is a helpful injection into the economy at a time when the pandemic still rages and ATO figures indicate that the September quarter will record negative GDP growth.
According to Assistant Treasurer, Michael Sukkar, this figure has been boosted by the low and middle-income tax offsets (LMITO) that was introduced by the Morrison government in 2019. To qualify for these offsets one must be an Australian resident that pays taxes and earns a taxable income below certain income thresholds. It further supplements the ATO’s 2021 Tax Help program. This program is targeting about 30,000 people with simple tax affairs and that earn less than $60,000. LMITO has been further extended, meaning that taxpayers will again benefit from tax returns lodged next year.
Effect on taxpayers:
For taxpayers that do not qualify for the Tax Help program and still need professional advice and representation on their tax affairs, the ATO is advising them to access the National Tax Clinic program. It is a government-funded program that mainly offers phone and web-conferencing consultations, free-of-charge from independent providers.
The ATO is also urging taxpayers to be mindful of lodging their returns too early as some details on incomes, interest, and dividends that are pre-filled are received by their office in late July. Waiting a little bit longer can help ensure returns are more accurate and allow for faster processing of refunds. The ATO reports that over 230,000 returns are adjusted annually after third party data has been received due to taxpayers that do not report all their incomes.
Recent lockdowns have put extra pressure on the economy, with some economists predicting that a second recession may be on the horizon. Prospects of this happening will be increased if the lockdowns continue much longer or if another major outbreak occurs elsewhere in the country.
Even with the financial support for businesses and workers from the federal government, there is uncertainty as to whether GDP growth will be revived even by the December quarter. The current lockdown on the Greater Sydney area has been extended for another month and is estimated to cost the economy over $100 million a day and the federal government another $2 billion in income support alone.
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