Tax returns: 10 million Aussies stung by brutal tax change

Millions of Australians may get stung this tax season, discovering they owe thousands of dollars in debt to the tax man.

Millions of Australians could get stung this tax season, with thousands already discovering they owe money to the Australian Taxation Office.

Aussies are lashing out at the ATO for the nasty shock on their tax returns – finding it is much less of a “return” than expected.

But there is an explanation for the shock tax debt that has replaced what most expect to be a sweet refund: this is our first tax season without “lamingtons”.

Millions of Aussies could find a nasty surprise at the end of their tax return this year.

Not the spongy, bakery classic, but the low-and-middle income tax offset (LMITO) – nicknamed by politicians and accountants as lamingtons – which ended last year, making this the first tax season without it.

Introduced as a temporary measure in the 2018/19 federal budget, the offset meant those earning between $37,000 and $126,000 were eligible for a tax cut of up $1500.

But now that it’s gone, finance guru and author Joel Gibson told the Today show it means tax payers are starting $1500 behind, which is “almost certainly playing into these” shocks.

Finance guru and author Joel Gibson (right) spoke about how Aussies have been stung on tax returns this year. Picture: Today show/Tiktok

Thousands of Australians have been left shortchanged, discovering they owe the tax man money this year, with many venting their frustration on social media. #9Todaypic.twitter.com/I1ljG7vD4l

— The Today Show (@TheTodayShow) July 15, 2023

“They call it the low-to-middle income tax offset for a reason, it’s particularly the $40,000 to $90,000 group who were receiving the full $1500 … so it’s that group that's getting hit hardest,” he said.

“And look the ATO says 10 million people have claimed the lamington so that’s more than half of taxpayers in Australia so it's a really widespread issue this year.”

But now that it’s gone, many Aussies are realising just how much they relied on that extra boost come tax time, and they are taking to social media to air their shock and horror – like a food blogger who revealed on TikTok she owed an estimated $10,537 to the tax office.

“When you thought you were finally getting a tax return this year,” the blogger, who goes by the name Rai foodie online captioned the TikTok video.

Her video instilled fear in the social media users who are yet to complete their returns, with one person noting, “I’m scared to do mine this year”.

Some Aussies have been spooked out of doing their tax return after some revealed their shock debt notices.

“See this why im avoiding my tax bro,” another said.

Others commented that they would “die” if they got that kind of tax debt, with another branding the situation “heartbreaking”.

Cameron Smith is another Aussie facing a large tax debt this year, revealing he owes $6562 to the ATO.

“Thought I’d get a trip to Europe but NO, the government says otherwise,” the local captioned the TikTok video.

Melbourne man Andrew Truong has found himself in a similar situation.

“I really wish this was a joke, I hate HECS,” he wrote online after finding out he owed $5018.

@shayzeepanda

i really wish this was a joke, I hate HECS #CapCut#ato#tax#taxrefund#australia#fyp#fypシ#hecs#student#university#hecs#melb

♬ original sound - Andrew Truong

Another worker, who goes by Abbs on TikTok, issued a warning to other Aussies with HECS debt after receiving an unexpected bill from the ATO.

“I just did my tax return. If you work in healthcare and have a HECS debt do not, I repeat, do not get Remserv until you have f**king paid off your HECS debt. I was mortified,” she said.

Remserv is one of the top provides in Queensland for workplace benefits such as salary packaging.

However, for those still paying off a HECS or HELP loan, salary packaging can mean you may get an unexpected bill come tax time.

The 21-year-old revealed she wasn’t educated on how salary sacrificing can impact you come tax time if you have a HECS debt and now owed the ATO an extra $3249.

“Are you kidding? I actually want to cry. That is what I wanted to get back and now I am f**king paying it. I paid $18,000 in tax and I have to pay another $3000 in tax,” she said.

“F**k the tax department.”

Joel Gibson says its important not to panic if you do get a debt notice. Picture: Tim Hunter.

But Gibson has warned Aussies who do get the debt notice not to panic, and know that a lot of people are set to receive them this year.

“You don’t have to pay it all back in one go,” he told the Today show.

“In fact, if it’s less than $100,000 which will be most cases you can actually get on the ATO website and work out your own payment plan … what can you afford to pay in instalments over a period of time.”

And those who are in “serious financial distress” can talk to their tax agent or get help and financial counselling through the ATO website.

Originally published as Tax returns: 10 million Aussies stung by brutal tax change