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Expecting a big tax refund for 2023? Maybe not…

Expecting a big tax refund for 2023? Here are five reasons you might get a smaller refund this year, or even a tax bill.

1. Loss of Low and Middle Income Tax Offset

This is the main reason tax refunds have reduced this year. Between 2018-19 and 2021-22, you may be eligible to receive on or both of the:

  • low income tax offset – if you earned up to $66,667
  • low and middle income tax offset – if you earned up to $126,000

The low and middle income earner tax offset ended on 30 June 2022, so you won’t see this reduction on the 2023 tax assessment.


If you did not inform your employer about your HECS/HELP debt, it is possible that a portion of your income was not deducted each week to fulfill this obligation. This means you will be obligated to pay the entire compulsory repayment at tax time.

Additionally, if your earnings were higher than expected this year, it could lead to being categorised into a higher repayment bracket.

3. ABN / Sole Trader / Side Hustle Income

This reason is more common this year than ever before. People who fall under this income type face a unique challenge as no tax is withheld from their earnings throughout the year. This can result in substantial tax obligations when the financial year comes to a close. The absence of regular tax withheld along the way means that individuals in this situation must brace themselves for potentially sizable tax bills once their annual taxes are calculated. It’s crucial for individuals in this category to plan and prepare accordingly to ensure they have the means to cover these substantial expenses when the time comes.

4. Medicare Levy Surcharge

If you earned more than $90,000 as a single, or $180,000 as a family without adequate private health insurance, you will be required to pay the Medicare levy surcharge. This surcharge could be up to an extra 1.5% in addition to the 2% Medicare levy.

5. Capital Gains

Capital Gains Tax is the tax you pay on profits from disposing of assets including property, shares, crypto or other investments. This tax is specifically imposed on the gains made from the sale or transfer of these assets. Therefore, when you incur a capital gain, it will effectively raise the amount of tax you are liable to pay.

What should I do if I receive a tax bill?

Ensure you use a reputable tax agent to ensure you are maximising deductions and paying the lowest tax-legally.

If you lodged your tax bill without the help of a tax agent, you will need to pay your tax bill by November 21. If you use a tax agent you will generally receive additional time to lodge and pay.

You are generally able to arrange a payment plan to pay the tax bill off over time, however when the tax bill is not paid on time, including when on a payment plan, the ATO will start charge you interest on your debt.

If the debt is likely to cause you serious financial hardship, there may be options such as delay or lessen HECS/HELP repayment, or even compromise the tax debt

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