Tax Refund Smaller Than Expected?
Why is My Tax Refund Smaller Than Expected?
When it comes to taxes, there’s something called a “tax refund” that many Australians look forward to. It’s like a reward for paying taxes throughout the year. But recently, the size of these refunds has decreased for some people. Let’s find out why your tax refund might be smaller than expected.
Taxes play a significant role in Australia. They help fund important things like schools, hospitals, and roads. A chunk of the money you make goes towards taxes; in return, you expect something back. This is where tax deductions and tax offsets come in. They lower the amount of money that’s counted as income for tax purposes. This means you might end up paying less in taxes and even get some money back as a refund. Getting refunds is good because it encourages people to follow the tax rules.
In the past, the government introduced a special rule that lowered taxes for people with medium to low incomes. This rule gave back, up to $1,080 from 2018 to 2021 and up to $1,500 in 2021-22 for those earning up to $126,000. For some folks, this meant extra money in their tax refunds. But this rule was temporary, and it’s not around anymore. Because of this, some people have seen their refunds get smaller compared to previous years.
Are We Paying More Taxes Than Other Countries?
It’s a bit complicated. Australia collects a significant portion of its money from income taxes – about 40% of all tax money comes from people’s incomes. When you compare this to other countries, we’re one of the highest in terms of income tax. But don’t worry, it’s not all bad news. When you look at how much money people actually take home after taxes and benefits, Australia is pretty close to the average.
Also, unlike other countries, we don’t have a separate tax for things like healthcare or social security. This means we pay less in some ways because our general taxes cover these things.
Taxes are higher for those who make more money. In fact, around 11.6% of the top earners pay over half of all income tax in Australia.
Good News – Changes Are Coming!
The government is planning to make some changes to taxes. They’re going to lower taxes for many people starting in 2024. This means we won’t rely on income taxes as much, and things might get more balanced.
So, Are We Paying More Taxes Than Other Countries? It depends on how much you make. If you’re earning a lot, you’re likely paying more. If not, you might not be paying as much as it seems. For more information as this article.
Taking on a Second Job – Is It Worth It?
Sometimes people get a second job to make some extra money. For example, an Uber driver might also have another job during the day. This is more common than you might think – almost 7% of Australians have two jobs.
People take on second jobs for different reasons. Some want to cover higher costs, others are trying out a new business while still keeping a regular job.
But is it a good idea? From a tax point of view, the more you earn, the more taxes you pay. But there’s a catch: the more you make, the fewer social benefits you can get. So, you need to think about how much you’ll actually earn, how much it’ll cost you to earn that money, and how this extra income affects your overall finances.
If you’re taking up a second job in something like the gig economy (like driving for Uber), you might be treated as a freelancer. This means you’re responsible for sorting out your taxes. It can get complicated, but there are benefits too – you can claim some expenses related to your second job to reduce your taxes.
Just make sure you know the rules and consider how this extra job might affect your overall financial situation.