Online tax lodgement: E-tax returns

Since the advent of the Internet as the one stop shop for all financial transactions, from shopping to banking, it makes sense that online tax returns would eventually become the norm.

The “e-tax” program (the Tax Office’s online lodgement system) was initiated by the Australian Taxation Office (ATO) in January 1997 and has steadily increased in popularity, finding favour amongst time-constrained professionals. If you aren’t already, should you be taking the online route for tax returns, or does the Internet fail to make tax less taxing? Money Buddy explores.

E-tax: The tax office's free tax return

In 2004 over one million taxpayers processed their tax returns online – out of the 2.9 million taxpayers in total who prepare their own returns. This significant change, which has only increased since then, with 1.9 million Australians lodging their tax online in 2007, marks another area whereby the Internet has carved an input.

Income tax online: etax 2007

E-tax has grown in popularity not simply due to the time it can save those lodging tax return forms, but also because of the time it can cut from actual tax return processing. With life moving ever quicker, and obligations seemingly increasing, meeting the tax returns deadline isn’t always an easy task, which makes e-tax a welcome alternative to labouring over paper forms.

Former Tax Commissioner Michael Carmody said, “E-tax returns are processed much faster than paper returns so that in most cases users receive any refund owing within 14 days of lodging.” Even in late 2005, Carmody spoke of the growing strength of the online system, stating that, in future, “online lodgements are likely to equal, if not surpass, traditional paper returns.”

The ATO's website offers more than just a means to lodge your tax form, offering information on computer requirements, filling out an online tax return form, correcting mistakes, and rebates and bonus claims. The online system can be accessed free of charge 24 hours a day, seven days a week.

However, Tax Commissioner Michael D'Ascenzo has stressed a need for the system to improve before it can be fully considered a total alternative to paper returns, and also feels that it is limited in its ability to simplify a complex system, stating, "Our current system which includes deductions for work related expenses, tax offsets, and optional systems and choices limits the potential efficiency of pre-filling initiatives."

"Pre-filling" is the process whereby third-party information (income details, for example, which many organisations are required to report to the Tax Office by law) is automatically entered into your e-tax return form.

Restrictions of Australian tax returns online

Despite the potentially time saving system of e-tax, there are a number of stumbling blocks. Quite astoundingly, Mac OS and Linux users are not expected to be compatible with e-tax until 2009. Security of e-tax continues to be a concern for businesses also, despite D'Ascenzo revealing that the ATO has spent over AU$40 million upgrading its online portal to enhance security features and offer downloadable payment slips.

As a means of saving time, online tax lodgement can be very effective, especially if you are more familiar with filing and processing documents online. If you are more comfortable with filing paper tax returns it may be worth considering the time and effort that can be saved (as well as reduced processing time) and don’t forget that you can print out any documents that you wish to file in the traditional way.

Despite the ATO’s claims that e-tax is “one of the first [tax] applications in the world to be offered by a revenue service”, however, the system is still developing more than ten years on, and there may still be some way to go before all Australians are not only able to trust the security of this “cutting edge” technology but also are able to access it via their computer platform.