The start of a new financial year means tax time is once again upon us.
For many Australians, it means getting some extra money to spend on a trip, put into their savings, or pay off bills.
But several people have already taken to social media to report that, rather than getting a refund this year, they've been hit with a surprise tax debt.
"My toxic trait is thinking I was going to get money back and be able to go on a holiday," one person wrote on TikTok, sharing a screenshot showing they owed the Australian Taxation Office (ATO) $4,326.85.
While a few social media users were expected to receive refunds in the thousands, many others said they were bracing to get very little — if anything — back.
Why might you get a tax bill?
People are issued tax bills when not enough money has been withheld from their taxable income through the financial year to meet their tax obligations.
ATO assistant commissioner Rob Thomson said this can happen for a variety of reasons.
"Some examples of these include things like people might be earning multiple jobs or have extra sources of income that moves them to a higher tax bracket, they may have claimed the tax-free threshold on more than one job, which means then when they do their tax return at the end of the year, both employers have been holding less money than they should have," he said.
"It could be because they've received some government allowances and payments and some of those are taxable.
"It could be as well that they haven't informed their employer that they've got a HELP or a HECS debt and so the employer hasn't been withholding that during the year."
Other examples can also include earning passive income through interest on your savings, having to pay the Medicare levy or Medicare levy surcharge, or receiving too much of a private health insurance rebate.
What about the stage three tax cuts?
There's been a lot of talk about stage three tax cuts in recent months, but they didn't actually come into effect until 1 July, meaning they won't impact your return this year.
Under the federal government's revised plan, someone earning an average wage of $73,000 will get a tax cut of more than $1,500 this financial year.
People with an income of $50,000 a year will pocket an extra $929, while those earning $200,000 will receive $4,500.
Although the changes mean many Australians ultimately pay less tax, Thomson said they're unlikely to affect whether you receive a refund or not in 2025.
"You should be seeing the benefit of that in your take-home pay every fortnight or every month or every week, depending on your pay cycle," he said.
"If you are having the correct amount withheld based on the new rates during the year, then it really shouldn't impact one way or another your tax return at the end of the year."
When should you lodge your tax return?
If you're planning on doing your tax return online, the ATO advises waiting until your pre-filled data is in before lodging it, which typically happens by the end of July.
If you're preparing your return yourself, you need to lodge it by 31 October.
If you're using a registered tax agent, you may have longer.
What should you do if you get a tax bill?
The date by which you need to pay your tax bill will be on your notice of assessment (NOA), the document the ATO sends you after it's checked your return.
For most people, that will be 21 November — even if you lodged your return late.
Those who lodge their return before 31 October but don't receive their NOA until after that date will have 21 days to pay before they start accruing interest on their debt.
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For example, if you lodge your return on 22 October but don’t receive your NOA until 5 November, you will have until 26 November to pay.
Thomson said that, if you think you're going to have trouble paying your bill on time, you should get in touch with the ATO as soon as possible.
"Our payment plans obviously do require someone to make an upfront payment and then try to pay the debt off as quickly as possible to reduce any interest charges," he said.
"But if people do need additional help, they can contact us or speak to their registered tax agent."
How can you avoid a tax bill?
Thomson said if you got a tax bill this year, there were a few things you could do to try to avoid getting one again.
"If you are working more than one job, make sure that you've only claimed a tax-free threshold on one," he said.
"If you have a HELP or a student loan or a study support loan, make sure that you've informed your employer of that.
If have private health insurance, Thomson said you should also make sure to tell your insurer if your income changes.
"Your private health insurer could be applying the wrong health insurance rebate and then at tax time that means that you've got too much rebate, so obviously that can reduce your tax refund or you can get a tax bill because of that as well," he said.
To speak with a financial counsellor in your state or territory call the National Debt Helpline on 1800 007 007.
Call 1800 808 488 to speak to a First Nations financial counsellor from Mob Strong Debt Help.
