Australians preparing to submit their 2025-26 tax returns are being urged to think twice before rushing to lodge on July 1, with the Australian Taxation Office warning that filing too early could slow down refunds, trigger corrections and create unnecessary paperwork later.
The warning comes as millions of taxpayers look forward to tax season and potential refunds. Last year, the ATO issued more than 2.6 million individual refunds by July 31, with the average refund reaching $2,548. While that figure is likely to attract attention, tax officials say getting a return right is far more important than being first in line.
For households facing ongoing cost-of-living pressures, a tax refund can provide a welcome financial boost. However, experts say taxpayers who rush to lodge before key information becomes available may end up waiting longer for their money than those who take a more measured approach.
Why the ATO Is Encouraging Taxpayers to Wait
Each year, the ATO receives information from employers, banks, government agencies, private health insurers and investment providers. This data is then used to pre-fill millions of tax returns, helping taxpayers avoid mistakes and reducing the risk of reporting incorrect figures.
However, much of this information is not available immediately when tax time officially opens. Income statements may still be undergoing final checks, while bank interest, dividend income, Centrelink payments and private health insurance details can take additional time to flow through the system.
ATO Assistant Commissioner Anita Challen said many taxpayers mistakenly believe lodging first automatically means receiving a faster refund.
In reality, returns submitted before all relevant information becomes available are more likely to contain errors, omissions or discrepancies that can delay processing and require amendments.
Because of this, the ATO recommends waiting until late July, when most pre-filled information has usually been reported and loaded into tax returns.
The official myGov tax time guidance also notes that waiting until pre-fill information is available can make the lodgement process simpler and more accurate.
Hundreds of Thousands of Tax Returns Needed Corrections
The ATO’s warning is supported by data from the previous financial year, which revealed how frequently taxpayers submit returns containing incorrect information.
More than 140,000 individual tax returns were corrected due to discrepancies involving employment income, interest earnings, dividends, Centrelink payments, Medicare levy exemptions and private health insurance records.
Meanwhile, the ATO’s data-matching program adjusted more than 595,000 individual tax returns because of missing income, overstated deductions, incorrect tax credits and other reporting inconsistencies.
These adjustments demonstrate how easily errors can occur when taxpayers lodge before all relevant information has been reported or reviewed.
Many of these mistakes are not deliberate. Instead, they often arise because taxpayers rely on incomplete records or submit returns before third-party information becomes available.
The Average $2,548 Refund Doesn’t Tell the Full Story
The average refund figure of $2,548 is one of the most eye-catching tax statistics heading into the new financial year, but taxpayers should be careful not to assume they will receive a similar amount.
Refunds vary significantly depending on income levels, tax withheld during the year, deductions claimed, offsets received and additional income sources.
Someone who worked multiple jobs, earned investment income or generated income through freelance work may have a very different tax outcome from someone whose only income came from a single employer.
Likewise, some Australians may receive refunds substantially larger than the average, while others may receive little back or even face a tax bill.
Understanding the best time to lodge an Australian tax return before the ATO deadline can help taxpayers avoid common mistakes that may affect the speed of their refund.
Work-Related Expense Claims Remain Under Scrutiny
Work-related deductions continue to be one of the most heavily reviewed areas during tax season.
To claim an expense, taxpayers generally need to show that it was directly related to earning their income, that they personally paid for the expense and that they were not reimbursed by their employer.
Supporting evidence is also essential. Receipts, invoices, diary records and logbooks remain important documents if a claim is questioned.
The ATO regularly reminds taxpayers that deductions cannot be claimed simply because an expense feels work-related. Claims must meet eligibility requirements and be supported by records.
To help taxpayers understand these rules, the ATO maintains more than 40 industry-specific and occupation-specific guides outlining what workers in different professions may be able to claim.
Working From Home Claims Continue to Draw Attention
Working from home deductions remain a major focus area for the tax office.
Eligible taxpayers can generally choose between the actual cost method and the fixed-rate method when calculating home office expenses.
Under the fixed-rate method, taxpayers can claim 70 cents for each hour worked from home. However, records of hours worked must still be maintained.
Many taxpayers underestimate the importance of keeping accurate records. Even where expenses appear legitimate, insufficient evidence can create problems if the claim is reviewed.
Side Hustles and Online Income Are Increasingly Visible
The ATO is also reminding Australians that all income must be declared, regardless of where it comes from.
This includes freelance work, consulting, cash jobs, rental income, bank interest, dividends, online marketplace sales and earnings from digital platforms.
As data-sharing arrangements continue to expand, it has become increasingly difficult for undeclared income to go unnoticed. Financial institutions, online platforms and other organisations now provide significant amounts of information directly to tax authorities.
Even relatively small income streams may still be taxable and should be reviewed carefully before a return is lodged.
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AI-Generated Tax Advice Could Create Problems
Another emerging issue this tax season is the growing use of artificial intelligence tools to help prepare tax returns.
While AI applications can assist with research, organisation and general tax information, experts warn that taxpayers remain fully responsible for the accuracy of their returns.
RMIT Professor of Finance Angel Zhong cautioned that AI-generated deduction lists may include claims that taxpayers are not actually entitled to make.
Even when technology is used during preparation, taxpayers still need receipts, invoices and supporting records to prove that a deduction is legitimate.
The ATO’s increasingly sophisticated compliance systems are designed to identify inconsistencies, making proper documentation more important than ever.
A Smarter Approach to Tax Time
Rather than focusing on lodging as quickly as possible, taxpayers may benefit from using early July to organise records, review income sources and confirm deductions.
Checking that income statements are marked tax ready, verifying bank interest information, reviewing health insurance records and gathering receipts can significantly reduce the likelihood of problems later.
For many Australians, waiting a few extra weeks could result in a smoother tax return process and a faster refund outcome than rushing to submit incomplete information.
With the ATO warning that early lodgement often leads to errors and amendments, patience may prove to be one of the most valuable tax strategies available this year.
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