I know what you're thinking, 'why the hell not?!'. Well, hold ya horses and hear us out!
We know, we know… You’re outraged by this headline! Why wouldn’t a big tax refund be good?! Hold your horses and hear us out.
Each year, nearly 15 million Aussies lodge a tax return. Of those, around two-thirds receive a tax refund of around $4,000. That’s around $3 billion all up! Wowzers.
Sounds good, doesn’t it? I mean, who doesn’t love a big, juicy lump sum paid straight into their bank accounts - especially with the cost of living on the rise. It feels like free money, right?!
But actually, ya might be wrong.
When you get a tax refund, it just means that you have paid the ATO more tax than you actually needed to. So, they’re basically saying… Thanks for your cash, but you’ve actually overpaid us.
Essentially, that means you just gave the Government a nice $4,000 interest-free loan. Or rather, we’re all giving the Government a really nice $3 billion loan.
That money could have been invested or saved, and you may have earned some (albeit, not much) interest on it.
If your tax refund is lower than you thought, it’s likely that you paid the right-ish amount of tax during the year, or you didn’t claim (or weren’t eligible for) as many tax deductions.
But like we said, that’s actually a good thing! It just means that you likely received more money in your paycheck - and the tax man got less of it. Nice one.
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