Tax time can be a stressful but also rewarding period as many Australians receive their tax returns. That raises the question, “How much will I receive in my tax return?”.
The blog is perfect for people that want to understand and estimate their tax returns. In this blog, we will cover how tax refunds work, factors that affect your tax refund, how to estimate your tax refund, and how to lodge your tax return.
How do tax refunds work?
A tax refund is the amount of money the Australian Tax Office (ATO) will return to you if you have paid more tax throughout the year than you should have.
For example, if you have earned $100,000 for the financial year and you have $30,000 of tax withheld on your group certificate, you will receive $5,000 as a tax return!
If you withheld less than $25,000 on your group certificate then you would owe the ATO money come tax time.
What factors affect your tax refund?
There are several factors that can increase or decrease the amount of tax you pay for the financial year. Some factors that affect your tax refund include:
Income: A higher income generally means paying more taxes. This can potentially lead to a higher tax refund as the more you earn, the more your employer withholds from your wages.
Deductions: You can claim a variety of deductions that reduce the amount of tax you owe such as charity donations, work-related expenses, and medical expenses. Claiming deductions will lower your taxable income and thus the amount of tax that was required to be withheld on your group certificate. Bigger tax deductions will lead to a bigger tax refund.
Tax offsets and rebates: The government offers many tax offsets and rebates that can be used to increase your tax return. The low-income tax offset and the family tax benefit are two examples.
Amount of tax withheld: The amount of tax withheld throughout the year that shows up on your group certificate will determine how much tax refund you will receive. If you withheld more tax than you were required to you will receive a tax refund. If you withheld less tax than you were required to then you will pay tax at the end of the year.
How do you estimate your tax refund?
The easiest way to estimate your tax refund is to use the One Click Life tax refund calculator. With three simple steps, you can estimate your tax refund for the year.
- Income: You should receive a payslip for every payment you receive. If your pay is fairly consistent, you can work out your yearly income. For example, if you earned $50,000 for 8 months of work, you would earn approximately $75,000 ($50,000 / 8 months x 12 months). In this example, you will enter $75,000 into the income field.
- Tax withheld: Your tax withheld is also included in your payslips. Like income, your yearly tax withheld can be calculated. For example, if your tax withheld after 8 months is $13,500, your yearly tax withheld would be $20,250 ($13,500 / 8 months x 12 months). Here you would enter $20,050 into the tax withheld section.
- Deductible expenses: Add your tax deductions for the year and how much you intend to spend for the remainder of the year. For example, you may have incurred work-related expenses of $900 and intend to spend $200 more for the year. Here you would enter $1,100 ($900 + $200) into the tax deductions section.
Alternatively, you can estimate your tax refund yourself using the ATO tax brackets.
| Taxable income | Tax on this income |
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 – $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
| $180,001 and over | $51,667 plus 45 cents for each $1 over $180,000 |
*Table includes resident tax rates for the 2022-23 financial year
Example: Peter is an Australian resident that earns $115,000 per year. Peter will be required to pay $5,092 and 32.5c for every $1 over $45,000.
Peter earns $70,000 ($115,000 – $45,000) over $45,000 so he is required to pay $22,750 ($70,000 x 32.5 cents).
By adding the $22,750 and $5,092, we get Peter’s income tax payable of $27,842 for the year.
Including the Medicare levy of 2% ($115,000 x 2% = $2,300), Peter has a total tax payable of $30,142.
For the year, Peter had tax withheld of $34,000. This means Peter will receive a tax refund of $3,858 ($34,000 – $30,142).
How do you lodge your tax return?
Using One Click Life’s platform is the easiest way to lodge your tax return. You can follow the five-step process to lodge your online tax return with One Click Life.
- Personal details: When starting your tax return your personal details are pre-filled from the ATO. Confirm and edit the information that is needed to continue to the next step.
- Income: This step requires providing details about your main occupation and any additional income or PAYG summaries.
- Deductions: A list of prepopulated deductions for your occupation is suggested automatically. The “Search Bank Transactions” button makes it easy to find all claimable transactions rather than digging through your receipts. If you are unsure what you can claim you can contact our team of accountants to help you through the process.
- Results: You can view your estimated tax return before it is lodged, based on all the data from the previous steps. If something doesn’t add up or you’re unhappy with your tax return you can speak with one of our tax accountants. Once happy, lodge your online tax return and the tax return will be processed as fast as possible.
- Congratulations: Our team of online tax accountants will check your tax return one last time to ensure that everything is accurate. In the event something is wrong, we’ll contact you right away. Just as easy as that, you’ll receive your tax refund directly into your account.
If you have withheld more tax than you were required to pay during the financial year, you will receive a tax refund from the ATO. To better understand the question “How much will I receive in my tax return”, you need to know your income, deductions, tax offsets available, and the amount of tax that is withheld. With that information, you can estimate your tax refund using the One Click Life tax calculator or calculate it yourself using the ATO tax brackets. You can lodge your tax return with 5 simple steps using the One Click Life platform.
One Click Life can help with your tax return!
Need to complete your tax return? One Click Life allows you to complete your online tax return with the click of a button.
Using an online tax agent is the easiest way to complete your tax return. Why wouldn’t you use an online tax agent if you could claim the fees as a deduction on your next tax return? One Click Life does more than tax! We can help with your Mortgage, Will, and Health Insurance, so you can enjoy the finer things in life.