When you lodge your tax return with the Australian Taxation Office (ATO), it initiates a comprehensive review process.
Processing essentially involves the ATO verifying the information you’ve provided, calculating your tax liability, and determining whether you’re entitled to a refund or if you owe additional tax.
How Long Does Tax Return Processing Take?
The duration of tax return processing can vary significantly depending on several factors, such as:
- Complexity of your return: Returns with intricate deductions, investments, or business income typically require more scrutiny and time.
- Time of year: Tax season is generally busier for the ATO, potentially leading to longer processing times.
- Errors or omissions: Mistakes in your return can delay the process as the ATO needs to clarify information.
Returns that are lodged online are usually processed within 2 weeks. Paper returns, on the other hand, take about 10 weeks.
What Happens During Tax Return Processing?
The ATO employs a systematic approach to process tax returns. This involves:
- Data validation: The ATO checks for inconsistencies and errors in the information provided.
- Income verification: Your income details are matched with information from employers, banks, and other sources.
- Deduction assessment: The ATO evaluates the validity and accuracy of claimed deductions.
- Tax calculation: Based on your income and deductions, the ATO calculates your tax liability.
- Refund or debt determination: If you’re eligible for a refund, the ATO initiates the payment process. But if you owe tax, you’ll receive a notice of assessment.
What Does Return Received Mean?
When you lodge your tax return electronically or by post, the ATO acknowledges its receipt with a “Return Received” status.
This simply indicates that your return has been successfully submitted and is awaiting processing.
The “under assessment” status signifies that the ATO is actively reviewing your tax return.
Various checks and calculations are being performed at this stage.
A “refund approved” status is also positive news. The ATO has confirmed your eligibility for a refund and is in the process of transferring the funds to your nominated bank account.
The issuance of a Notice of Assessment marks the completion of the processing phase.
This document details your tax position, including any tax payable or refund due.
What Can Cause a Tax Return to Be Delayed?
There are several factors can contribute to tax return delays:
- Incomplete or Incorrect Information: Errors or missing details can hinder the processing.
- Complex Tax Affairs: If your financial situation is intricate, it may require additional scrutiny.
- ATO Workload: Periods of high tax return lodgement can lead to processing delays.
- Audits: If the ATO selects your return for an audit, the processing will be suspended until the audit is complete.
What to Do if Your Tax Return is Delayed
If your tax return is experiencing an unusual delay, consider these steps:
- Check Your Online Account: The ATO’s online portal provides updates on your return’s status.
- Contact the ATO: If you’re unable to resolve the issue online, contact the ATO directly for assistance.
- Seek Professional Help: If your tax situation is complex or you’re facing significant delays, consulting a tax professional might be beneficial.
Remember that understanding the tax return process can help you to manage your finances really well.
When you get yourself accustomed to the different stages and potential challenges, you can handle the system with confidence.