Why is my tax refund less than I was expecting?

The main reason for the apparent decline is the return to ‘business as usual’ following the end of the low and middle-income earner tax offsets (LMITO).

The LMITO scheme ran from 2019 and 2022 and the offset delivered up to $1,080 from 2018-19 to 2020-21, and up to $1,500 in 2021-22 for those earning up to $126,000. However, it does not apply for the 2022-23 financial year.

The scheme was a significant boost for Australians each tax time and bolstered the tax returns of millions. For many, the end of this offset has meant that their tax refund has reduced dramatically compared to previous years.

The reward was in the form of tax deductions that reduced the amount of net income assessed for tax purposes and tax offsets that reduced the tax payable, generating a refund.

Why do some people owe the ATO?

For many people, this is because they are pushed into a higher tax bracket through the course of the financial year. Perhaps they have had a pay rise, or because they have additional income, such as from a side hustle or selling cryptocurrency at a profit and making a capital gain.

The ATO predicted many would receive lower returns this year or even be in debt, with Assistant Commissioner Tim Loh stating, “If you need additional support, reach out to us or have a chat with your registered tax agent as early as possible so we can find a solution.”

How we can help

If you received a tax debt this year that you weren’t expecting, or you’re behind with your tax, contact us.

TaxAssist Accountants can help you to maximise your tax return by claiming deductions on everything possible including working from home expenses, mileage, depreciation, interest repayments, superannuation contributions, financial advice, record keeping and self-education – as well as industry specific deductions.

Call 1300 513 332 or complete our online enquiry form here to arrange your free initial consultation. 

Date published 24 Aug 2023 | Last updated 24 Aug 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.