ATO tax refund warning as Aussies boast about big $4,000 cash boosts: 'Paid the wrong tax'
An experienced chartered accountant has revealed why you shouldn't "celebrate" getting a huge tax refund. The start of the new financial year can mean you receive hundreds or even thousands of dollars back from the Australian Taxation Office (ATO) as a refund.
A poll of more than 6,700 Yahoo Finance readers found 45 per cent will be relying on this cash boost to pay for essential bills. But Two Sides Accounting's Natalie Lennon told Yahoo Finance you shouldn't be expecting much back at all if your affairs are fairly straightforward.
"I think everyone got used to the past couple of years when they were getting quite a bit back, whereas if you do get a large tax refund, it usually means you've paid the wrong tax throughout the year," she said.
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The government ended the low and middle-income tax offset in 2023, and many might not be able to claim work-from-home deductions if they've been forced back into the office.
Those are just some of the reasons why your refund might look different from years gone by.
But that hasn't changed the hype surrounding tax time.
People have been flooding social media with videos showing what the ATO has estimated they might receive once their tax return has been assessed, which is based on limited information.
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Some of the clips show individuals set for tax refunds of more than $4,000. Equally, there have been people posting screenshots showing they're only expected to receive a measly $6 or even less.
Lennon told Yahoo Finance that refunds were fairly common in Australia's tax system, but explained having a big tax refund "is not really something to celebrate".
She said that's because you could have had more money in your pocket throughout the year if you were taxed correctly, which you could have put towards essentials, savings, investments, or treats.
This was backed up by UNSW Associate Professor Ann Kayis-Kumar.
“It might sound counterintuitive but getting a tax refund isn’t necessarily a good thing, it means the ATO has been holding onto your money over the year," she said.
"On the other hand, needing to pay the ATO money isn’t necessarily a bad thing — it means you’re earning more money than most other Australians."
Millions hanging out for a tax refund
More than 14 million people lodged a tax return last year, according to H&R Block, and approximately 10 million of them received a refund.