Latest news with #taxreturns
Yahoo
2 days ago
- Business
- Yahoo
The big tax change set to push vulnerable people out of work
Plans to force taxpayers to submit digital information about their earnings to the government every 12 weeks will hit lower earners the hardest, even pushing the poorest people out of work and onto benefits, experts have warned. From April next year, almost 1 million people who are sole traders or landlords earning over £50,000 will have to make five tax returns to HMRC each year, including tracking their income every quarter. By April 2028, that rule will apply to anyone with a turnover exceeding £20,000 — meaning workers who don't pay any income tax at all could still be forced to keep detailed digital documents and submit them every three months. Accountants preparing for the change say the shift will have a damaging impact on the working lives and finances of freelancers and sole traders. They warn the move to quarterly updates will be hardest for people who are already vulnerable in the British economy including single parents, people working informal hours, those claiming benefits and those with English as a second language. According to experts, many low earners are now planning to retire early or give up work to avoid the extra hassle and cost of completing a quarterly tax return. Those who can afford to pay an accountant will face higher costs for the extra hours of support, while those who cannot stretch to hiring help will face many more hours of their working lives being lost to administration. Those juggling low paid self-employment with caring for children or elderly relatives could be hit hardest by the extra burden. Read more: Do you trust your partner enough to give them money for tax purposes? Robyn Milstead, director of tax at LKA Chartered Accountants, told Yahoo News UK: 'These things are not just a source of anxiety, they are impossible for some. I really worry about tradespeople where English isn't their first language. For single parents who are self-employed, the first deadline for the quarterly submission is 7 August — straight in the school holidays.' There will be some exemptions from the scheme, including for those who are highly digitally excluded or cannot keep electronic records for religious reasons, but Milstead is sceptical that these will be sufficient to protect vulnerable workers. 'We're not expecting these exemptions to extend to someone who isn't good with computers, or to clients who can't read,' she says. Free software will be made available to help people keep careful records that can be uploaded to HMRC, but Milstead says this alone will not overcome the barriers that are likely to push many towards quitting work altogether. 'Giving people software doesn't make them into book keepers, and I think a lot of people will feel that it's very intrusive,' she says. The Making Tax Digital programme (MTD) is designed to help small businesses and sole traders understand their turnover and reveal forgotten income earned during the earlier parts of the financial year, bringing in a more consistent tax take to the Exchequer. But accounting this way makes little sense for those whose income fluctuates dramatically over the year, such as working parents who may not earn anything during the 13 weeks of school holidays yet have larger incomes during term time. Confusingly, though digital turnover reports will have to be submitted every three months, the payment dates for income tax and national insurance — at the end of the months of January and July each year — are not changing. There is also little information available about how these submissions will work alongside universal credit and other benefit payments. 'As someone raised by a single parent, I saw firsthand how hard it is just to make ends meet. It's hard to imagine how so many single parents are going to find the time to continue running a business, juggling childcare but then also learn how to bookkeep and file quarterly updates without it putting a huge amount of pressure on top,' says Tom Bickle, director and principal accountant at JP Blackmoor Limited. 'Saying everyone can use accounting software is like giving an accountant a pair of scissors and expecting them to be a hairdresser overnight. As a country we are seeing more increases in food bills, light and heat, taxes and general costs of living, with household incomes struggling to keep pace. The introduction of MTD is likely going to force many lower earning, self-employed individuals and families into seeking more stability, less hassle and much less financial risk by ceasing their business.' Read more: How to build passive income Despite the money it could make them, accountants are not happy. Concern over implementation of the policy is now so widespread that more than 400 professionals have joined a WhatsApp group to discuss how to support their clients and even push back against the change. Just months before the switchover, HMRC has still not provided guidelines on the crossover between monthly universal credit claims and quarterly digital tax returns. 'There's a huge amount of us that don't want this at all,' says Milstead. 'They're bringing this in without any guidance on it. The amount of stress in the industry just takes away from useful work we could be doing elsewhere.' Confusion and anxiety over the switchover has led older members of the group to consider early retirement to avoid having to work through it. Others are encouraging their clients to repress their income this year rather than pass over the threshold which would require a switch to quarterly reports. Milstead believes that the disruptive programme is highly unlikely to improve the UK's tax take. 'The Revenue have this thought that people forget their income. Actually people are really diligent about reporting their income, but really bad at their expenses,' she says. A spokesperson for HMRC says: 'Making Tax Digital will modernise tax processes to make it easier for customers to stay on top of their affairs, reducing errors and further closing the tax gap. We've worked extensively with customers, representative bodies and software developers to ensure MTD works well for small businesses and landlords and that they are prepared for the change — with free and low-cost software available.' Read more: UK set to lose 16,500 millionaires this year as non-dom status ends UK's rising debt cost puts Reeves and tax rises in spotlight Buy-to-let rents bringing in 7% returns to landlordsError in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 days ago
- Business
- Yahoo
ATO's major tax return update for 15 million Aussies: ‘It's time'
The Australian Taxation Office (ATO) has given Aussies the green light to lodge their tax returns, saying "it's time". Taxpayers had been warned against lodging their tax returns too early, or risk making a mistake and being flagged for review. Now the ATO has given the all clear for taxpayers to begin lodging, as most with simple affairs will have their information pre-filled into their accounts. Assistant Commissioner Rob Thomson said the ATO had completed the pre-fill of more than 91 million pieces of information from employers, banks, government agencies and private health insurers. 'You've been patiently waiting, but now you're good to go! Whether you lodge using a registered tax agent or lodge yourself through myTax, pre-fill information will now be available,' he said. RELATED ATO tax bill warning as reason Aussies hit with debts revealed The top 10 highest salaries in Australia paying up to $700,000 Centrelink's 'balancing' move could provide cash boost or expose debt If you are lodging yourself, you'll need to check all the pre-filled data is correct, add anything that's missing and then include any deductions you are entitled to claim. Aussies have until October 31 to lodge their tax returns if they are doing it themselves. If you are going through a professional, you have up until May 15 next year. 'Don't forget that you need to include all sources of income in your tax return. This includes side-hustles, linked income from providing ride sourcing services or selling services via an app,' Thomson said. 'Remember, the ATO has 40 industry and occupation specific guides to assist you in what you can claim and what records are required to prove it.' Who should wait to lodge their tax returns? Most Aussie taxpayers with simple affairs can start lodging now, but if you have more complex affairs, it could be worth waiting. Hive Wise founder Hripsime Demirdjian told Yahoo Finance salaried employees with no investments were now in the 'safe zone' to start preparing their tax returns. 'However, if you're someone who has a more complex tax return, which includes investments such as managed funds, you would be wise to hold off lodging your tax return until August/September, as this information is generally not available until then,' she said. 'In all cases, you want to make sure the data in your prefilling report is marked as 'tax ready' before you lodge it as this indicates the data is complete." When will I receive my tax refund? Once your tax return is processed, you'll receive a notice of assessment from the ATO. This will tell you if you are entitled to a tax refund or if you owe any tax. Finder research found more than 10 million Aussies were expecting a tax refund this year, with the average person anticipating a $1,519 boost. You may get a refund from the ATO if you paid more tax during the year than you should have. However, accountants have noted it's not necessarily a good thing to get a big refund. The ATO app and ATO online services through myGov allow you to see the progress of your refund once you or your registered tax agent has submitted it. 'Most refunds are finalised within two weeks and this process cannot be sped up, even if you call us,' Thomson said.
Yahoo
21-07-2025
- Business
- Yahoo
ATO warning over $23,000 cash boost for homebuyers: 'No way around it'
Australians wanting to take advantage of the government's First Home Guarantee scheme are being warned they need to complete their tax returns with the Australian Taxation Office (ATO) first. A mortgage broker said forgetting this important step can cause 'a lot of unnecessary stress' and could mean you end up losing a property. The First Home Guarantee allows homebuyers to buy with a 5 per cent deposit and avoid paying lenders mortgage insurance (LMI), which currently costs the average buyer around $23,000. To be eligible, you need to submit your Notice of Assessment for the 2024-25 financial year. Finance Society director and mortgage broker Sarah Smelt told Yahoo Finance many people did not realise they needed to complete their tax returns for the previous financial year to use the First Home Guarantee. RELATED ATO tax bill warning as reason Aussies hit with debts revealed Common neighbour problem plaguing Aussie houses Centrelink issues ATO alert as Aussies submit their tax returns 'It happens all the time and it ends up being so stressful for everybody involved,' Smelt said. 'A Notice of Assessment can take 14 days and we need that physical document. It can be a little bit stressful for people that buy around this time if they are using the First Home Guarantee.' Smelt said some home buyers were stuck in the position where they were now waiting to complete their tax returns. The ATO has recommended people wait until late July for their information to be pre-filled from their employer, banks, government agencies and health funds. 'A lot of clients don't understand that this isn't a bank rule, the Notice Of Assessment. The bank can't change that requirement. It is actually a government requirement from the First Home Guarantee scheme. So there's no way around it,' she said people in this boat had to wait until they could complete their tax return. She recommended people speak to their accountant. 'It's being really mindful and educated that there may be a risk, if they do make an offer and they are successful, that they may end up losing that property if we can't get the required documentation in time,' she said. 'Now there's no financial penalty for that, if they've signed subject to finance. But there's an emotional loss … You will likely be devastated if that was to happen.' Who is eligible for the First Home Guarantee? The government has released 35,000 new places for the First Home Guarantee for the 2025-26 financial year this month. To be eligible, you need to earn $125,000 or less as an individual and a combined $200,000 or less for joint applicants. You'll also need to be a first-home buyer or have not owned a property in Australia in the last 10 years at the home loan date. Property price caps apply, with a $900,000 cap applying for Sydney, $800,000 for Melbourne, $700,000 for Brisbane, $750,000 for Canberra and $600,000 for Perth, Adelaide, Hobart and Darwin. Smelt said it normally took between seven and 10 business days to find out if you were eligible for the scheme and had secured a place. 'We recommend people are pre-approved prior to making offers so that they're not going to face any of those last-minute issues that could pop up,' she told Yahoo Finance. Smelt recommended people seek advice from their accountant and mortgage broker on their specific circumstances. What changes are happening? The government announced plans during the election to expand the existing scheme to allow all Australian first-home buyers to purchase with a 5 per cent deposit from January 2026. The government would also raise price caps for properties eligible under the scheme, get rid of income caps and the limit on the number of places available. Sydney residents would be able to get in with a new $1.5 million cap, Melbourne $950,000, Brisbane and Canberra $1 million, Adelaide $900,000, Perth $850,000, Hobart $700,000 and Darwin $600,000. Smelt said she expects there would be a 'huge influx' of people wanting to use the First Home Guarantee when the changes come into effect and the price caps are lifted. She said she was already seeing more first-home buyers trying to get into the market now as the Reserve Bank of Australia (RBA) begins cutting interest in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
20-07-2025
- Business
- Yahoo
Centrelink issues ATO alert as Aussies submit their tax returns: 'Steal your money'
Services Australia has warned Australians to have their wits about them as they submit their tax returns. More than 15 million people lodge their financial information with the Australian Taxation Office (ATO) after July 1, and it's the perfect time for scammers to pounce on unsuspecting Aussies. They often try to impersonate government bodies like myGov and Centrelink by sending out mass text messages and emails across the country. Services Australia said it can be dire if you let your guard down. "They pretend to be us so they can steal your personal information and money after you click a link or give them your details," it said. If they get access to your personal information, they can conduct identity fraud or log in to certain accounts like myGov and lodge fake tax returns on your behalf. RELATED ATO issues urgent tax return warning as Aussies risk losing over $1,500 Common neighbour problem plaguing Aussie houses Compensation sought for millions of Qantas customers How scammers are preying on Aussies during tax time Services Australia has noticed scammers have been trying to catch out certain Aussies with certain tactics this year. One is highlighting a one-time payment, tax rebate or other type of refund, as many will be hoping for a cost-of-living boost with their tax return. They also might try to convince you that there is a problem with your myGov account, tax return information, or that your account is about to be "frozen or suspended".These hackers will usually use urgent language in their messages to make you act quickly. Their correspondence to you will also typically include a link or URL, but Aussies have been urged to avoid this at all costs. "Don't click on the internet link," Services Australia said. "If you clicked on a suspicious link or gave personal information to a scammer, head to our website to find out what to do." The government body said it can help in the following ways if you've been hacked or scammed: offer support and advice about how to protect yourself and your personal information check your customer records for any suspicious activity make corrections to your records if needed add extra security measures to prevent unauthorised access. 150 per cent jump in scams as ATO adds better protection The ATO issued a similar warning about scammers ever since Aussies were able to submit their tax returns for the 2024-25 year. The tax office had seen a 150 per cent increase in impersonation scams over the last 12 months, with 90 per cent of these being conducted via email. 'This is the time of year when people are awaiting their tax returns or expecting to hear from the ATO, and scammers know it,' ATO assistant commissioner Rob Thomson said. The ATO has strengthened the security features on its app and Aussies can now monitor their accounts in real-time through alerts if changes have been made to their records. If certain details are changed without your permission, you can instantly lock down your account to ensure nothing else is affected. 'If you receive a notification and something doesn't feel right, lock your account immediately in our app, and verify and report the interaction on the ATO website or by calling 1800 467 033 during business hours to discuss any suspicious activity," Thomson in to access your portfolio
Yahoo
18-07-2025
- Business
- Yahoo
Reason Aussies are being hit with shock ATO tax bills: ‘Same problem'
Many Australians have been left blindsided after lodging their tax returns and finding that, rather than getting a refund, they actually owe money to the Australian Taxation Office (ATO). An Australian tax accountant said many workers were running into the 'same problem' due to the way the payroll system works. Australians have flooded social media to share the outcome of their 2025 tax returns since the start of the new financial year. While some have been 'boasting' about their hefty tax refunds, others have shared their shock at being hit with a tax bill. Tax Invest Accounting director Belinda Raso told Yahoo Finance she was seeing more people getting tax bills because they worked multiple jobs and no longer had the 'buffer' of the $1,500 low and middle income tax offset, which ended on June 30, 2022. RELATED ATO tax return warning for 2 million Aussies over dangerous act Coles and Costco grocery price comparison 'shocks' Aussie mum Compensation sought for millions of Qantas customers hit in major cyber data breach 'The way our payroll system works is even if you do the right thing and you tick not to claim the tax-free threshold on your second job, that [job] is not withheld at enough,' she said. If you earned more than $45,000 in your first job, for example, you would already be in the 32 per cent tax bracket, including the 2 per cent Medicare Levy. 'When you tell your [second] employer not to claim the tax-free threshold, you're actually going straight onto that first tax bracket, which is 16 per cent plus 2 per cent Medicare levy,' Raso said. 'But if your first job is already $45,000, you need to be paying it at 30 per cent plus 2 per cent, so you are down 14 per cent and this is where people are getting tax bills.' Raso said Aussies in this position should either ask their employer to withhold the additional tax, put it away themselves during the year, or not claim the tax-free threshold on their main job. Otherwise, it's likely to happen again this year. There were 963,100 multiple job-holders in March this year, the latest ABS data found, representing 6.5 per cent of all employed people. Raso said she thinks changes to the payroll system would mean "less disgruntled Aussies" who end up with a tax debt, despite thinking they are doing the right debts can be a factor If you have a HECS-HELP debt, Raso said you'll need to let your employer know about it, or you could end up with a tax debt. If you have reportable fringe benefits or salary sacrifice, this could also be a reason you get a tax debt. That's because HECS repayments are calculated with salary sacrifice added back in and reportable fringe benefits are 'grossed up'. If you work multiple jobs, your combined income may also be enough to push you over the HECS repayment threshold and mean you get a tax debt. The threshold for the 2025 financial year was $54,435. 'If you have two employers, and if you don't reach that HELP debt limit, even though they know you've got a HELP debt, it won't come out of your pay,' Raso said. 'But then, added together, both of them will get you over that threshold and you will end up with the tax debt.' Other reasons you could get a tax debt Raso said the Medicare Levy Surcharge can be another reason you receive a tax debt. Your employer withholds the Medicare Levy, but not the surcharge. For the 2025 financial year, the surcharge applies to singles earning $101,001 or more and families earning $202,001 or more who don't have hospital health insurance cover. You can also get a tax bill if you earned other income during the year. That could include from side hustles, bank interest, investments, rentals and capital gains tax. What do I do if I have a tax bill? If you receive a tax bill, you need to pay it by the due date on your Notice of Assessment. If you can't pay on time, you can ask the ATO to set up a payment plan and break your bill down into smaller amounts. If you have an outstanding amount owing to the ATO after the due date, you will be charged a general interest charge. It is currently 10.78 per cent annually and compounds daily, even if you are on a payment plan.
