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Why your tax refund can vary from year to year (2 min read)

There are many reasons that your tax refund may vary from one year to the next, sometimes you may not get a refund and might have to pay tax!

Not everyone gets a refund. If you are employed and get paid a salary or wage your employer deducts an amount of tax from each pay ranging from 10% - 47% depending on how much you earn per the table below.

Assuming your employer deducts the correct tax (use the ATO calculator here to check) you will not be entitled to a tax refund unless you have certain expenses otherwise known as deductions that relate to your employment that you can claim.

If your tax rate is 30% for example, for every $1 of tax deduction you should get 30c of tax back when you lodge your return. For example $1,000 worth of deductions = $300 tax back. It is a common misconception that you get all of your deductions back in tax when this is not the case.

We summarise some of the most common scenarios below:

Things that affect your tax refund:

  • Less deductions than prior year

  • More income such as interest, dividends, rental etc that you have not paid tax on

  • Capital gains on sale of investments that you have not paid tax on

  • Getting a pay rise during the year/changing jobs

  • the tax withheld is based on your annual tax rate so if you get a pay rise during the year that is substantial then you may have some more tax to pay at the end of the year

  • Payouts - if you leave an employer and receive a taxable payout

  • HECS debt

  • Casual employment

  • the tax withheld is based on your annual tax rate so if your income is not consistent pay to pay you may pay too much tax or not enough

  • Taxable income has gone down which has resulted in deductions only reducing tax by say 10% instead of 30%

  • If you have other ATO or government agency debts they may have taken your refund

Reasons why you have to pay tax:

  • Sole trader/partnership or trust business and haven't paid any tax during the year (self employed don't have wages paid by their employer which means no tax has been withheld)

  • Company director that has not paid any wages with tax withheld

  • Other investments that you haven't paid tax on such as interest, dividends, rental income etc

  • Capital gains on sale of investments that you have not paid tax on

  • Accidentally claiming the tax free threshold twice if you have more than one job

  • Private health insurance rebate tier is wrong (check here)

  • ​a few years back the Government changed the private health insurance from a flat 30% rebate for all to a tiered percentage depending on your single or family taxable income. You can nominate to adjust the rebate upfront when paying your private health insurance or at the time of doing your tax return.

Natalie Lennon

Founder & Director

Two Sides Accounting

02 9030 0269


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