Secret ATO form that 'doubles your tax break' from July 1

Unless you have been living under a rock, you’ll know that just about every Aussie is in line for a tax cut on July 1.

After that, your weekly pay will be larger by this much:

• If you earn $50,000 a year, $18 a week ($929 a year)

• If you earn $80,000 a year, $32 a week ($1,679 a year)

• If you earn $100,000 a year, $42 a week ($2,179 a year)

• If you earn $150,000 a year, $72 a week ($3,729 per year).

It’s good news but, with prices as high as they are, it won’t go that far. Well, what if I told you there is a way to probably double your tax break?

There's a little-known hack to stack your tax break, Nicole Pedersen-McKinnon says. (Source: Getty/Supplied)

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The hack to stack your tax break

This strategy works for people who receive a tax refund every year. And it works best for those who have about the same tax deductions every year.

While your refund might be a nice little boost come, say, September or whenever you get around to filing and getting your tax return processed by the Australian Taxation Office (ATO), if you think about it, you have let the government keep your money for some 15 months (more if you file later).

Wouldn’t it be better – as times are so tight – to get that money spread across every pay?

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Here’s how much more you could take home a week:

• If you usually get a $500 refund, $10 a week

• If you usually get a $1,000 refund, $19 a week

• If you usually get a $1,500 refund, $29 a week

• If you usually get a $2,500 refund, $48 a week.

And remember that’s on top of the stage 3 tax cuts, above.

Here’s how you arrange the extra.

The simple ATO form to fill out

While you don’t have to do anything to collect your stage 3 tax cut (a lower percentage of tax will just be applied to your earnings under the pay-as-you-go system), you do need to stick up your hand if you want to super-charge this tax break with your refund… if you want the tax office to repay-as-you-go!

There is a simple form to do it – which you can find here.

This withholding variation form will let you nominate the new amount of tax you would like taken out – simple as that.

Why does the tax office let you do this? The essential purpose, as it puts it, is “to make sure that the amount of tax withheld during the income year best meets your end-of-year tax liability”.

As I put it earlier, why would you pay excess along the way and let the ATO mind it for you?

Of course, you don’t want to overestimate your tax refund in any given year… or you will end up having to pay money back.

What you need to be careful about

Firstly, you need to set the ‘variation’ with reference to the tax refund you received last tax year. This is because last year the low-and-middle-income tax offset was removed; previously it added up to $1,500 to the tax refunds of people earning between $37,000 and $126,000.

Secondly, you need to realise that a lower tax rate – thanks to stage 3 cuts on July 1 – will probably mean a lower tax refund. Even if your deductions are identical, your tax break on them will be less.

With those two things in mind, though, you can set a safe and sensible amount extra to receive in your pay each week.

The ATO says processing of an online variation application takes 28 days… in perfect time to ‘double up’ with your tax cut.

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