Getting thousands back at tax time? It might be a warning sign, not a bonus
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Some Australians were cheering over $4,000 tax refunds this month—but experts say that might be a red flag, not a win.
Despite the hype, your big return could actually mean you’ve lost money throughout the year.
And for those only getting a few dollars back—or nothing at all—you might actually be better off.
Accountant Natalie Lennon issued a reality check as tax season kicked off, warning that a large tax refund often signals incorrect tax withholding throughout the financial year.
‘I think everyone got used to the past couple of years when they were getting quite a bit back, whereas if you do get a large tax refund, it usually means you’ve paid the wrong tax throughout the year,’ Lennon said.
Lennon, who heads Two Sides Accounting, explained that with fewer deductions available this year—especially after the 2023 removal of the low and middle-income tax offset—many Australians were likely in for a surprise.
Additionally, fewer people can claim work-from-home expenses due to return-to-office mandates.
That hasn’t stopped the buzz on social media, where Australians have shared their estimated refunds—some upwards of $4,000—based on preliminary ATO data.
Others revealed they would only receive a few dollars back, or in some cases, nothing.
But Lennon stressed that even a tiny refund could indicate more accurate tax payments throughout the year.
‘Having a big tax refund is not really something to celebrate,’ she said.
‘You could have had more money in your pocket throughout the year if you were taxed correctly, which you could have put towards essentials, savings, investments, or treats.’
UNSW Associate Professor Ann Kayis-Kumar backed Lennon’s stance, saying the ATO holding your money all year wasn’t a financial advantage.
‘It might sound counterintuitive but getting a tax refund isn’t necessarily a good thing, it means the ATO has been holding onto your money over the year,’ she said.
‘On the other hand, needing to pay the ATO money isn’t necessarily a bad thing—it means you’re earning more money than most other Australians.’
According to H&R Block, more than 14 million people submitted tax returns last year, and about 10 million received refunds.
But experts say it’s important to focus less on the refund total and more on ensuring your tax is correctly calculated year-round.
If you're wondering how to avoid overpaying tax in the future, understanding which deductions you’re entitled to can make a real difference.
While some people end up with huge refunds because they’ve been overtaxed, others miss out on money they could rightfully claim.
Here’s another story that breaks down some of the most overlooked deductions—and how they could add hundreds to your refund.
Read more: Overlooked ATO tax deductions could boost retirees’ refunds by $974: Are you missing out?
How would you feel knowing your $4,000 ‘bonus’ was actually just your own money returned too late?
Despite the hype, your big return could actually mean you’ve lost money throughout the year.
And for those only getting a few dollars back—or nothing at all—you might actually be better off.
Accountant Natalie Lennon issued a reality check as tax season kicked off, warning that a large tax refund often signals incorrect tax withholding throughout the financial year.
‘I think everyone got used to the past couple of years when they were getting quite a bit back, whereas if you do get a large tax refund, it usually means you’ve paid the wrong tax throughout the year,’ Lennon said.
Lennon, who heads Two Sides Accounting, explained that with fewer deductions available this year—especially after the 2023 removal of the low and middle-income tax offset—many Australians were likely in for a surprise.
Tax refunds may signal withholding error, expert warns. Image source: Pexels/Andrea Piacquadio
Disclaimer: This is a stock image used for illustrative purposes only and does not depict the actual person, item, or event described.
Disclaimer: This is a stock image used for illustrative purposes only and does not depict the actual person, item, or event described.
Additionally, fewer people can claim work-from-home expenses due to return-to-office mandates.
That hasn’t stopped the buzz on social media, where Australians have shared their estimated refunds—some upwards of $4,000—based on preliminary ATO data.
Others revealed they would only receive a few dollars back, or in some cases, nothing.
But Lennon stressed that even a tiny refund could indicate more accurate tax payments throughout the year.
‘Having a big tax refund is not really something to celebrate,’ she said.
‘You could have had more money in your pocket throughout the year if you were taxed correctly, which you could have put towards essentials, savings, investments, or treats.’
UNSW Associate Professor Ann Kayis-Kumar backed Lennon’s stance, saying the ATO holding your money all year wasn’t a financial advantage.
‘It might sound counterintuitive but getting a tax refund isn’t necessarily a good thing, it means the ATO has been holding onto your money over the year,’ she said.
‘On the other hand, needing to pay the ATO money isn’t necessarily a bad thing—it means you’re earning more money than most other Australians.’
According to H&R Block, more than 14 million people submitted tax returns last year, and about 10 million received refunds.
But experts say it’s important to focus less on the refund total and more on ensuring your tax is correctly calculated year-round.
If you're wondering how to avoid overpaying tax in the future, understanding which deductions you’re entitled to can make a real difference.
While some people end up with huge refunds because they’ve been overtaxed, others miss out on money they could rightfully claim.
Here’s another story that breaks down some of the most overlooked deductions—and how they could add hundreds to your refund.
Read more: Overlooked ATO tax deductions could boost retirees’ refunds by $974: Are you missing out?
How would you feel knowing your $4,000 ‘bonus’ was actually just your own money returned too late?
