What Makes my Tax Refund Lower than the Last Year?
Receiving a tax refund from the ATO lower than the previous year always feels devastating to you. Even if it happens when your income statement and employment situation remain similar. There are several causes that can Lower Tax Refund Melbourne for you. But if you don’t know the exact reasons, it keeps you annoyed about the acknowledged decreased refund. That’s where Kirpa Tax Accounting Firm is here to describe potential reasons to you. Understanding those factors can help you identify why your tax refund is reduced for the last financial year. Consequently, you can plan your taxes more effectively for the next financial year.
- Jumped to Higher Tax Bracket
A shift to a higher tax bracket means your income has increased from the previous years. Subsequently, it impacts your total taxable income, which potentially decreases your tax refund. This can happen due to increased salary, bonuses, incentives, commission, and overtime pay, etc. Higher taxable income results in higher overall tax liability even if the employer has increased PAYG withholding. The final tax computation can reduce your refund amount from the previous fiscal year.
- Less Withheld Tax by Employer
ATO’s tax refund can be influenced by the amount of tax withheld from your income by the employer. This is one of the important Reasons for Lower Tax Refund Melbourne you can consider. If your employer has withheld less tax on your income than the previous year, you may get less refund potentially. This usually happens due to changes in your employment, PAYG arrangements, and information provided to the employer.
- Fewer Tax Deductions Claimed
When you are eligible to claim tax deductions, they potentially reduce your taxable income. But if you have claimed significant deductions previously but less this year, refunds change. Certain work-related deductions, travel expenses, and tax agent fees are qualified ATO deductions. Remember, you should not claim an expense just for increasing your tax refund. Until the expense meets relevant ATO requirements, you must ignore it to deduct.
- You have a Side Hustle
You must check eligible ATO Tax Refund Melbourne by considering this factor. Having a side hustle is where most Aussies lose their refund. You may have a primary job that is free from the tax threshold. Likewise, your side hustle might not withhold any tax amount. But during tax time, the ATO can combine both incomes, and you may have tax liability. Accordingly, you can have a lower refund from the ATO.
- Capital Gain Changes Tax
You may recently have had a capital gain from the sale of property, shares, or cryptocurrency that has earned profit. Thus, the capital gain you have earned can change your taxable income. This can result in a bigger tax liability and lesser refund from the ATO. Capital gains can have complex tax implications due to certain reasons. So, depending on specific circumstances, you may have a lower refund than the previous year.
Improve your Tax Position for Next Financial Year
Your financial situation may change, which can have an effect on your tax liability and refunds. Thus, seeking professional Australian Tax Return Help Melbourne can maximise your savings. Kirpa Tax assesses your current and previous tax returns to conclude the difference and render the best advice.
FAQ’s
Why have I received $1000 less refund than the previous year?
The low- and middle-income offset ended in the year 2022 by the Australian government. Hence, most people lost about 700-1500 AUD from their refund.
Why is my refund lower while my earnings are the same?
Lower Tax Refund Melbourne may happen because you have claimed fewer deductions. Your employer may also have less withheld tax this income year.
Will having a side hustle lower my income tax refund?
Side hustles can account for Reasons for Lower Tax Refund Melbourne. At tax time, you may owe a tax bill, which can kill your refund.
Can earning more money reduce my tax refund?
Earning more income can reduce your ATO Tax Refund Melbourne potentially. It can change your tax bracket as a high-income earner for the financial year.
Why did I get a tax bill from the ATO instead of a refund?
If your already paid tax is lower than your assessable income, you get a tax bill. If you have additional income this year, it can impact your tax liability.
Can I fix a low tax refund for the next financial year?
Keep a check on your eligible deductions and claim them in accordance with ATO compliance requirements. Get Australian Tax Return Help Melbourne from a registered tax agent.
To whom can I contact for tax help and refund calculation?
Kirpa Tax Accounting Firm to check your tax position by assessing your income. Experts check eligible deductions to maximise your tax savings and compute your refund.