This year, we’ve headed into tax time after a long haul of difficulties. And a lot of us feel that we should be rewarded with a nice chunk of tax return. A recent study by finder revealed around 9 million Aussies are expecting a refund this year, and one in ten admitted it’s “critical” to their financial wellbeing.*
It’s also this time of year that the same stories are floating about online. A lot are about people being “horrified” by their returns. The headlines are bold, but if you read the basics of any of these articles, these horrors have usually happened for fairly simple reasons.
Let’s look at some common ones you’re likely to see and the real stories behind them.
Filing your tax return on 1 July and feeling like you’re being lied to because you didn’t get the refund the online tax portal told you. The ATO is not lying to you when this happens. On 1 July, the ATO starts finalising a lot of information about payments, superannuation, health insurance and the like. This takes time. If you file your tax return on 1 July, your tax information may not be complete, and any refund you think you’re getting will only be an ‘estimated return’, because:
- your tax return won’t be filed until all information has been finalised
- once it does, whatever estimated return you believe you will be getting back may not be the same, and may be less than you anticipated.
Filing your tax return and discovering you owe a large amount of money to the ATO (HELP debt). In most cases, this happens due to an unpaid HELP debt. If you don’t inform your employer that you have a HELP debt when you start a job, then the required percentage of your salary isn’t being set aside throughout the financial year. It’s also important to remember:
- If you are salary sacrificing or have a salary package, you’re likely not being taxed the right amount in comparison to your total income. It will be up to you to work out how much extra tax you need to pay and either set money aside over the course of the year to pay up when tax time rolls around, or see if your employer can withhold more of your salary each pay.
- Voluntary payments to your HELP debt do not count towards your compulsory payments. If you’re setting aside money to offset for salary sacrificing or packaging, wait until you receive your tax bill before making any payments.
Filing your tax return and discovering you owe a large amount of money to the ATO (extra income you didn’t know you had to declare). If you work multiple jobs, or operate a side hustle, you could be under-declaring your total income at tax time. The type of job may also need additional things such as an ABN and GST set up.
- If you’re doing anything that isn’t the usual employer pays employee setup, tax doesn’t get taken out each pay like it would if you were an employee. This is something you will need to calculate and set aside yourself. The ATO has more information here.
- If you are a content creator, you are operating a business if you are intending to make a profit, and any income you make must be declared, regardless of where it came from. The ATO has more information here.
The most important thing to remember is this: when it comes to tax, it’s 100% your responsibility to make sure that you’re paying the amount that you need to. If you aren’t sure, consider getting in touch with a professional. You can also use a pay calculator like this one to help you estimate individual income tax, HELP debts, super, and tax offsets.
Try our tax calculator here.
