The end of the financial year is traditionally the time when Aussies blow the dust off their Australian Taxation Office login, claim as many work-related expenses as they think they can get away with, and cash out, narrowly avoiding an audit for another year.
Many people look forward to tax time as they usually get a nice little gift from the ATO. In the ongoing cost of living crisis, that extra mid year bump may be just the thing to get you through the next few months.
Unfortunately, many people are reporting receiving much lower tax returns than they expected. Some are even reporting that they actually owe the ATO money when they would normally have a few extra thousand dollars to play with.
“I wasn’t banking on anything specifically, but I was sort of looking forward to getting that extra little payout,” one caller told triple j Hack on Monday night.
“It was a solemn atmosphere. It was me, my girlfriend, and two roommates all looking at our tax calculations and none of them were good. We all had to pay the ATO.”
The radio program ran a special on the subject after a rise in people who had got in early to do their tax returns reported that their returns looked very different this year.
So, what exactly is going on? Why are our tax returns so low in 2023 and is there anything we can do about it? Here’s what you need to know.
Why Tax Returns Are Lower in 2023
Each year, the ATO fine-tunes its approach to tax returns and this year there have been more changes than most.
Over the past few years, Australians have been getting supersized tax returns, but that party now seems to be over.
During the pandemic, when hoards of workers were forced to establish home offices, the ATO allowed people to claim expenses for a simplified 80c an hour for every hour worked at home.
That was removed last year and a 67c model was brought in to reflect the more common forms of hybrid working.
This year, the ATO is clamping down even harder, requiring employees to keep detailed records of hours worked from home. They also no longer include anything beyond the basics of energy, phone bills, internet, and electronics.
If you haven’t kept a diary, and are unable to back up your claims, it’s thought you could be losing around $1,500 from your tax return.
However, the biggest change is that of the low and middle-income tax offset.
LITMO, as it’s known, was introduced in the 2018/2019 budget. It gave people earning between $37,000 and $126,000 a tax benefit of up to $1,500. 10 million people claimed LITMO in the 2020/2021 financial year.
LITMO, unfortunately, expired at the end of the last financial tax year. Combined with the above, these changes could put you $3,000 down. This is likely to result in a substantially reduced tax return and even money owed to the ATO.
Related:Â A Finance Expert on the First Thing You Should Do With Your Tax Refund
Related: What the ATO Have Warned They’ll Be Cracking Down on This Tax Season
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