ATO warns many to count on their tax refunds will shrink

It’s virtually a month into the brand new monetary yr and for tens of millions of Australians, meaning now could be the time to file your tax return.

A variety of pre-fill information is offered on the Australian Taxation Workplace (ATO) myGov platform that permits taxpayers to finish 2022-23 returns with minimal trouble.

“Many of the data we acquire from employers, banks, non-public well being insurers, share registries, and different authorities businesses shall be pre-filled in your tax return by the tip of July,” an ATO spokesperson stated.

“In case your monetary affairs are pretty simple the data it’s essential lodge shall be obtainable – however bear in mind, you continue to have to examine your particulars are correct earlier than you submit your return.

“We encourage you to try our occupation guides to work out what you possibly can and may’t declare this yr.”

However anybody anticipating a bumper return like these relished through the COVID-19 years may need to mood their expectations.

“The result of tax returns this yr could also be totally different than in earlier years, with some individuals receiving a decrease refund than anticipated, or perhaps a tax invoice,” the ATO spokesperson stated.

There are a couple of causes to count on smaller refunds this time.

That features the low- and middle-income tax offset (LMITO) not being obtainable this yr, whereas adjustments to work at home expense claims might also go away some taxpayers within the lurch.

Some Australians could even find yourself owing cash to the tax workplace, however everybody’s scenario is totally different so it’s greatest to seek the advice of with a tax agent about your circumstances.

LMITO isn’t any extra

The primary main change this yr is that the LMITO has stopped, so the beneficiant tax offsets that have been obtainable to tens of millions of Australians lately are not given.

Beforehand, a tax offset between $255 and $1080 was obtainable for individuals incomes between $37,500 and $90,000 beneath stimulus measures designed to help with the pandemic.

Nonetheless, in 2023 solely the Low Revenue Tax Offset (LITO) is  obtainable, which gives an offset of as much as $700 for individuals incomes between $37,500 and $66,000 a yr.

Which means greater than 1,000,000 taxpayers with revenue between $66,000 and $90,000 a yr received’t be eligible to assert a tax offset within the 2022-23 monetary yr.

Work-from-home adjustments

The opposite main change that would cut back tax returns for a lot of employees are new guidelines round work-from-home expense claims.

In a transfer that accountants imagine will go away many individuals within the lurch this yr, the ATO is requiring taxpayers to current real-time diaries of their WFH hours with the intention to declare bills.

Depreciation claims should even be made individually to working bills beneath a revised fixed-rate technique for calculating claims that was introduced in now that the COVID-era shortcut technique has expired.

Main consultants have beforehand advised TND that the requirement to maintain real-time information of distant work hours would hinder taxpayers as a result of many are more likely to have missed the memo.

Larger tax bracket?

Another excuse your tax refund is perhaps smaller – or non-existent – this yr is that you simply’ve gone up a tax bracket.

If you happen to’ve earned extra money over the previous monetary yr and have an excellent HECS/HELP debt then you might be stung by this.

Primarily, as a result of public scholar money owed accumulate over the course of a monetary yr and don’t get utilized to the precise mortgage till tax time, you might find yourself needing to pay extra.

That’s since you may have moved up a tier within the HECS/HELP compensation thresholds as a consequence of that revenue improve, requiring you to pay extra.

Tax debt? Right here’s what to do

If you happen to’ve discovered your self with a tax debt this yr that you simply don’t have the capability to pay, there are a couple of choices.

First, you possibly can apply for monetary hardship aid with the tax workplace for those who imagine you don’t have the flexibility to pay down the debt.

The ATO characterises critical monetary hardship in a wide range of methods, together with an incapability to pay for meals, lodging, clothes, medical therapy, training or different fundamental requirements.

You can be requested to offer proof of hardship.

However even for those who don’t qualify, you could possibly get the ATO to place you on a fee plan on your debt so it doesn’t hit unexpectedly.