Aussie taxpayers confused by Scott Morrison’s $1080 promised offset

If you’ve lodged your tax return, got a refund and are patiently waiting for this extra handout to hit your account, think again.

Taxpayers around the country have rushed to lodge their tax returns in record time this year, thanks largely to Scott Morrison’s tantalising promise of an extra $1080.

But excitement over that tax sweetener is quickly turning to confusion and anger as many Aussies wait for a handout that will never arrive.

According to Mark Chapman, H & R Block’s director of tax communications, many Australians mistakenly believe the tax cut will come in the form of a separate cash refund.

But it is actually a tax offset — which is automatically calculated when you lodge your tax return.

That means the refund or bill you’re left with after lodging your tax return this year is the final figure, with no magical extra cash destined for your bank account afterwards.

“We’ve had a lot of traffic to our website in relation to this, and I know the ATO has had a lot of calls and a lot of traffic as well, which suggests people are confused about how this works,” Mr Chapman told news.com.au.

“First, you’ve got to lodge your tax return in order to get the offset — if there’s no tax return lodged, there’s no offset, it is that simple.

“Secondly, it’s not a cheque for $1080 from the Government, it’s more complex than that. It’s a tax offset which reduces your overall tax bill, which could mean you will either get a bigger refund than you normally would, or alternatively, you might end up having to pay less if you receive a tax bill.

“And it’s not $1080 either — it depends on how much you’re earning, and it can be an offset of anywhere between $255 and $1080. If you earn more than $126,000, you don’t get anything at all.”

Hearing most people got between 250 & 800 instead $1080 tax offset as promised by the #LNP

What has been ppl experience?

Seems a lot of people on $80k or less (most) got lied to by scomo & Josh the coin

Also hearing centrelink & other debts being taken out , truth?#auspol

— Candide (@KafkaVoltaire) July 25, 2019

Have you received your entire tax cut yet?

a) Yes - Done my tax & I've received the full tax cut that was promised

b) No - I haven't done my tax yet

c) Yeah Nah Sorta - I did my tax but unexpected costs ate away the promised tax cut.

d) Abstain, show results
🐝#auspol #qt

— 💧Bee🐝 (@BelindaJones68) July 24, 2019

The amount of the offset you are entitled to will depend on your individual circumstances, such as your income level and how much tax you have paid throughout the year.
The maximum offset is $1080 per annum.
It doesn't mean that you will get an extra $1,080 in your tax

— Duana Job (@DuanaJob) July 16, 2019

Mr Chapman said the estimated refund or bill given to you either by your tax agent or via MyTax would be close to the final sum.

“You won’t get an extra $1080 on top of that — it is already built into your refund,” he said, adding the best way to get the offset quickly was to lodge “sooner rather than later”.

He said taxpayers who were still confused should consider hiring a tax agent to answer any questions and lodge on their behalf, and he wasn’t surprised that so many of us were still perplexed by the new system.

“I don’t think it was particularly well explained because it was all done in a hurry — there was all this business around the election and then when the legislation went through, it was all done very quickly,” he said.

“Particularly in the first few weeks of July it is understandable that people were confused because there was not much information out there, and it wasn’t even law for the first week of July.

“But it will be in place for the next few years, so people should be on firmer ground next year.”

Mr Chapman said the tax package had been “quite rushed” and the resulting chaos had caused a spike in inquiries as well as an overall increase in Australians lodging their tax returns earlier compared with 2018.

Frustrated Australians have also taken to social media to vent about the widespread tax time mix-up.

The famous $1080 figure bandied about by Mr Morrison was part of the Coalition’s proposed tax package, which was passed into law in early July after Opposition Leader Anthony Albanese announced Labor would “not oppose” the bill.

It was passed by the Senate after much debate, with the ALP originally questioning parts of the $158 billion tax package.

Prime Minister Scott Morrison’s ‘rushed’ package has left us confused. Picture: AAP Image/Mick Tsikas

Meanwhile, an Australian Taxation Office (ATO) spokeswoman told news.com.au tax refunds would be paid into a taxpayer’s nominated bank account within one to two weeks after lodging.

“We want to reassure taxpayers that we’ll automatically process any tax cut you’re owed from the low and middle income tax offset changes,” the spokeswoman said.

“You don’t have to do anything, just lodge online or through your tax agent as usual.

“For returns lodged from July 1, 2019, taxpayers’ refunds include any amount of the low and middle income tax offset that they are entitled to. There is no delay in processing the offset as part of people’s return.”

But the spokeswoman stressed an offset was “not an automatic refund”, and it would either result in a larger tax refund than normal or a smaller debt than would otherwise have been payable.

“Tax offsets reduce the amount of tax you pay on your taxable income,” she said.

“The low and middle income tax offset is a non-refundable offset, which means any unused offset amount itself cannot be refunded or reduce the Medicare Levy.”

The ATO has already issued more than 2.3 million individual 2019 income tax refunds with a total value of more than $5.6 billion.

The spokeswoman also said the amount of the offset and any refund taxpayers may be entitled to would differ for everyone “depending individual circumstances such as income level and how much tax was paid throughout the year”.

In a nutshell, taxpayers with a taxable income that does not exceed $37,000 will receive a low and middle income tax offset of up to $255.

People with a taxable income that exceeds $37,000 but is not more than $48,000 will receive $255, plus an amount equal to 7.5 per cent to the maximum offset of $1080.

Australians with a taxable income that exceeds $48,000 but is not more than $90,000 will be eligible for the maximum low and middle income tax offset of $1080.

And taxpayers with a taxable income that exceeds $90,000 but is not more than $126,000 will be eligible for a low and middle income tax offset of $1080, less an amount equal to 3 per cent of the excess.

For more information visit the ATO’s income tax estimator.

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