Understanding Tax Refunds

A tax refund occurs when the tax you’ve paid throughout the year exceeds your actual tax liability. This can happen for several reasons, such as overpayment of income tax or claiming deductions and offsets.

Why You Might Get a Refund

• Your employer withheld too much tax: Excess withholding from your salary can result in a refund.
• You claimed deductions: Deductions, such as work-related expenses, reduce your taxable income.
• You’re eligible for tax offsets: Tax offsets like the Low and Middle Income Tax Offset (LMITO) reduce your tax payable.
• You made extra tax payments: PAYG instalments or additional tax contributions can lead to a refund.

How Refunds Are Calculated

• Total taxable income: Calculated by subtracting allowable deductions from your gross income.
• Tax payable: Determined using the applicable income tax brackets.
• Refund calculation: If the tax paid exceeds the tax payable, the difference is refunded to you.

Refunds are generally deposited directly into your nominated bank account within two weeks of lodgement. Ensure your bank details are correct to avoid delays.

FAQs

What happens if my refund is delayed?

The ATO may delay refunds if they need to review your return. Ensure all details in your tax return are accurate to minimise delays.

Can I get a refund if I owe other debts?

The ATO may offset your refund against any outstanding debts, such as HECS/HELP repayments or overdue child support.