‘No one speak to me’: Aussies cop brutal ATO debts after completing tax returns
Aussies have started submitting their tax returns, with an increasing number left fuming after copping brutal bills instead of refunds.
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Every year around tax time social media becomes flooded with videos and posts of people complaining about their measly tax return, with many also being hit with debts.
It has been less than two weeks since Aussies have been able to submit their tax returns to the Australian Taxation Office (ATO), and it seems that many who have chosen to get in early this year have been less than thrilled with the outcome.
A quick scroll on TikTok will show dozens of videos of young people lamenting after their dreams of a healthy tax refund were dashed, instead being replaced by a bill.
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One user, Kenneth, said he spent “5 hours, 47 tabs, 3 breakdowns doing (my) tax return, just to find out I owe $4000 to the ATO”.
In the caption of the video he added: “The only return I got was emotional damage.”
Another young worker shared an image showing she owes almost $5800 to the ATO, asking “wtf is this” and “no one speak to me”.
A nurse made a video revealing his $3404 debt, while another TikToker, Elaya, was hit with a $1733 bill.
Another user revealed they owed close to $9000, writing, “Any accountants wanna help me?”
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News.com.au previously spoke to 21-year-old Queensland woman, Kristy, after she was hit with a whopping $32,459 tax bill.
She works in the event management and promotional marketing space and, while she wasn’t surprised to receive a debt, she wasn't expecting it to be so high.
“I make a decent amount of money so wasn’t too shocked to see the bill. I usually have a tax bill but it hasn’t been this large,” Kristy said.
“I end up making pretty much the same net income as years where I was working less so it feels like a bit of a lose-lose situation.”
Belinda Raso, tax agent and director at Tax Invest Accounting, told news.com.au there are a few main reasons she is seeing people copping tax debts when submitting their returns this year.
One of the key culprits is the rise in people taking on multiple jobs, with Ms Raso noting our payroll systems aren’t set up in a way that accommodates this.
Australian residents can only claim the $18,200 tax-free threshold for one job. For any other jobs they must inform their employer they will not be claiming the threshold. However, the accountant warned this is often not enough to avoid being hit with a tax bill at the end of the financial year.
“If your main job is earning $45,000 or more per year, when you tell that employer at your second job that you don’t want to claim the tax free threshold, you go to that first tax rate, which is sitting at 16% plus Medicare levy, that automatically defaults to that,” Ms Raso explained.
“So the employee has done the right thing, the employer has done the right thing, but if you’re earning $45,000 or above in that main job, you’re already sitting at 30 per cent tax rate, plus 2 per cent Medicare levy, so straight up, you’ve got a 14 per cent difference.”
Ms Raso said another common issue is to do with HECS-HELP debt.
The repayment income threshold is currently sitting at $56,156.
But, if you are earning under the threshold for both jobs, then neither employer will be withholding those repayments.
However, the ATO looks at your total taxable income, so, if your combined income is above the threshold and you haven’t been making repayments, you are going to be hit with a debt.
“So in your mind, you’re telling all employers, but again, it’s not adding up, and you end up with a debt,” she said.
Another situation she sees revolves around salary sacrifice, novated leasing and reportable fringe benefits.
Ms Raso said many people don’t realise that those reportable fringe benefits get grossed up by 1.88 times, which is going to impact how your HECS-HELP repayments are calculated, with them being repaid at a higher rate.
“Now, I do stress to people that you’re not actually paying more tax, so you’re paying the same amount as tax as your colleague, but if you’ve got a HELP debt, you’re repaying that HELP debt earlier,” she said.
She said those are the three main reasons she sees every year, with Ms Raso warning people who cop a debt this year are likely to find themselves in the same situation next year, unless they figure out why.
“If it’s not addressed, the same thing is going to happen next year. And if you’re one of the people that go may not have had a tax debt this year, but have gotten a second job, you’ll end up in that situation next year,” she said.
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Originally published as ‘No one speak to me’: Aussies cop brutal ATO debts after completing tax returns
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