More than 10 million Australians expect to receive a tax refund this financial year, with the average refund amounting to $1,519, according to research by Finder.
These refunds represent a significant financial relief for many households struggling amid rising living costs and economic pressures.
The Australian Taxation Office (ATO) has provided limited detailed guidance on this year’s tax season, offering few specifics beyond general recommendations.
Information reported by ColiTco highlights growing concerns about taxpayers rushing to file early. Tax experts emphasize the importance of a careful and methodical approach to avoid errors and ensure accurate returns during this critical period.
Millions Expect Tax Refunds in Coming Weeks
Finder’s research highlights that over 10 million Australians anticipate receiving tax refunds as the tax season opens on July 1.
Graham Cooke, Finder’s head of consumer research, explained that many Australians living month to month are eager to access these funds to ease financial strain.
The survey revealed that 7 percent of respondents called the refund “critical” to their financial wellbeing, while nearly one in four (about 25 percent) described it as “very important.” An additional 41 percent labeled the refund as “somewhat important” to their financial situation.
Cooke said,
Australians who are living month to month are very eager to access their tax refunds to ease financial strain.
He also emphasized the role of refunds as a much-needed reprieve amid rising living costs:
With many households grappling with the cost of living, these refunds offer a much-needed reprieve. For some, the refund is essential to cover essential expenses, such as keeping the lights on.
Refunds Vital for Households Under Pressure
The refund plays a significant role in supporting Australians facing financial pressure.
The survey noted a gender disparity in reliance on tax refunds: about 39 percent of women described the refund as “critical” or “very important,” compared to 24 percent of men.
This difference suggests that women may depend more heavily on the refund for managing expenses.
For many households, the refund offers an opportunity to catch up financially during tough times. Cooke advised taxpayers to consider using their refunds strategically:
Consider using the funds to pay down debt, deposit into a high-interest savings account, or contribute to superannuation to maximize long-term benefits.
Some Expect Bills Instead of Refunds
Not all taxpayers expect a refund this year.
Around 18 percent of Australians surveyed anticipate receiving a tax bill instead. This group faces the prospect of additional financial obligations during a period already marked by economic challenges.
The ATO has issued warnings against rushing to lodge tax returns to avoid costly errors and delays.
Experts Advise Careful Planning and Patience
CPA Australia’s tax lead, Jenny Wong, urged taxpayers to avoid filing returns too early. She highlighted the risks involved:
Firing the starting pistol on your tax return too quickly means you could end up shooting yourself in the foot.
Wong warned that lodging early does not guarantee receiving refunds faster:
There’s a misconception that lodging early means you’ll receive your refund first, but it’s not as simple as that.
Wong recommended waiting for the ATO to pre-fill data, which generally becomes available by late July. This pre-filled information includes data from banks, government agencies, insurers, and employers, helping to ensure the accuracy of returns.
It’s best to wait. It’ll save you in the long run – Wong said.
ATO Targets Common Tax Mistakes
The ATO will focus its compliance efforts on common areas where errors frequently occur. These include work-related expenses, deductions related to working from home, and income declared from multiple sources. Past ATO data shows taxpayers often overstate deductions or fail to report all income accurately.
Taxpayers are encouraged to gather all relevant receipts and documentation before submitting their returns to minimize mistakes. Accuracy and thoroughness are essential to avoid audits, amendments, or delays.
Financial Pressure Driving Refund Urgency
The urgency to lodge tax returns early reflects the financial pressures many Australians face amid the ongoing cost-of-living crisis. For some, the tax refund may be the only opportunity to improve their financial situation in the short term.
While refunds offer meaningful support, experts stress the importance of a thoughtful approach to maximize benefits. Waiting for pre-filled information and carefully reviewing claims can help reduce risks and improve outcomes.
The tax season officially begins on July 1, but the ATO recommends waiting until late July when pre-filled data is available. Millions of returns are expected, and taxpayers must ensure their information is complete and accurate to avoid complications.
Taking time to plan and file carefully can help Australians navigate tax season effectively, balancing the need for financial relief with the importance of accuracy and compliance.
