What is a tax refund?

We have an expectation that we receive a refund at tax time, but often people do not understand that this means that you have overpaid tax during the year.

A refund means that you are getting back the excess tax you have paid during the year.

Why is my tax refund less than last year?

For the 2023 financial year there has been a noticeable reduction in the amount of refunds that we are seeing for our clients.

During the year, there was a reduction in the Low to Middle Income Tax Offset. During Covid this was introduced as a cash flow stimulus and meant that most people received refunds of at least $1,500 more than they are for the current year.

Also, if you have changed jobs during the year or had multiple jobs it may be a case that your employer has not withheld enough tax during the year.

How much tax will I get back?

This depends on the tax you have paid. The less tax you have paid during the year, the less you will receive as a refund. The removal of the offset means that for some people, you may not receive a refund if you have not paid tax.

Why do I have a tax debt?

We are seeing a lot of tax debts where you may have been claiming the tax-free threshold from multiple employers. This results in an under collection of tax from your employers and may mean that you have underpaid your tax.

If you have existing tax debts, HECS or Government loans, these will reduce the amount of your refund, or result in a tax debt.

But I always get a refund!

This is not a good thing. It means that your employer has been withholding too much tax.

How do I pay a debt?

The ATO (Australian Taxation Office) will give you time to pay a debt and are there to provide options to assist you in getting your debt under control.

What can I do to increase my refund?

If you have valid work deductions these can increase your refund or reduce a debt but remember spending money just to get a refund is usually not the best answer.