Australian taxpayers are using TikTok to share their surprise and disappointment at their 2022-2023 income tax returns, highlighting some of the significant tax changes that came into effect last financial year.
Across videos brandishing the hashtags #taxtime, #ihatetax, and in at least one instance, #stitchedup, TikTok users claim to have been presented with unexpected tax debts stretching into the thousands of dollars.
We ain’t living this financial year 😂#australia #tax #mad #paymybills
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♬ Bills, Bills, Bills – Destiny’s Child
i was relying on my tax return to visit the dentist. now i’m poor and my gums hurt. #ato #taxreturn2023 #taxreturn #australia
♬ original sound – erin
I am not ok #taxtime #tax #taxtime2023 #stitchedup #depresion #fyp #viral #trending #ihatetax #ihatetaxseason
♬ original sound – Abbs
Less Tax Return This year#nepaleseinaustralia #itstaxtime #taxguru #taxtalk
♬ original sound – अनिश😮💨
While individual circumstances will vary, and it is always recommended to have a tax expert look over your details before lodging an income tax statement for extra clarity, here are some reasons your tax return could look a bit different this time around.
End of the Low and Middle Income Tax Offset
For many taxpayers, the end of the Low and Middle Income Tax Offset (LMITO) will result in a lower 2022-2023 tax return than in recent years.
The LMITO, affectionately dubbed ‘the lamington’, was introduced in the 2018-2019 federal budget as the first stage of the Morrison government’s three-stage tax reform plan.
It provided up to $1,500 in benefits to taxpayers earning less than $126,000 per annum.
Then-Prime Minister Scott Morrison declared it would provide “tax relief for middle and low income earners now,” before the government’s Stage Two tax cuts — an expansion of the 19% and 32.5% tax brackets — took place in 2022-2023.
Economic havoc wrought by the COVID-19 pandemic changed those plans, convincing the government to fast forward the Stage Two tweaks to 2020.
Despite low and middle-income earners technically benefitting from those raised thresholds, the LMITO stuck around.
It was broadly viewed as a way to ensure consumer spending through the economic slump, and the Morrison government extended it through to 2021-2022 as a form of stimulus while the Australian economy recovered from pandemic lockdowns.
Now, with lockdowns fading into memory, Australia has the opposite problem: the economy ran too hot in critical sectors, leading to inflation.
It is in this high-inflation environment that the LMITO comes to die, leaving some taxpayers with smaller returns than they have come to expect.
Notably, the Low Income Tax Offset, provides benefits to those earning below $66,667.
Crackdown on side hustle income
Some taxpayers with secondary gigs and side hustles might find they have been taxed more than expected.
In May, the ATO informed taxpayers to report all of their working income, not just the earnings from their primary occupation.
It issued gentle reminders for taxpayers to assess whether their money-making activities count as non-taxable, one-off events — or continuous and repeated operations with the intention of turning a profit, and therefore taxable income.
Australians who are honest and upfront about their various income streams might not face a shock in their 2022-2023 tax return.
But folks who obscure all of their earnings, or simply misstate them, might face a surprising tax liability.
To hammer home the point, the ATO also issued a not-so-subtle request for taxpayers to confess their actual income, less they pore through the numbers themselves.
The tax office has “sophisticated data-matching and analytical tools to identify taxpayers that under-report their income,” it said.
“It doesn’t matter whether you are carrying on a business or simply earning additional income through a digital platform, such as a website or even an app, you must keep accurate records of your income and include it in your tax return,” said ATO assistant commissioner Tim Loh.
Work-from-home rule changes
Australian workers may also face a lower-than-expected tax return this time around because of changing remote work deductions.
It is true that hybrid work is a persistent force in the Australian economy, and that office occupancy is yet to return to pre-pandemic heights.
Even so, the winding down of pandemic restrictions has seen many more workers return to the office than in 2021-2022.
More hours in a centralised workplace means fewer work-from-home expenditures which can be claimed at tax time.
Simultaneously, the ATO has changed how work-from-home deductions are tallied.
“From 1 July 2022 to 28 February 2023, we’ll accept a record which represents the total number of hours worked from home (for example a four-week diary),” Loh said in February.
“From 1 March 2023 onwards, taxpayers will need to record the total number of hours they work from home.”
That extra requirement will cause taxpayers to take stock of their actual hours worked from home over the past financial year, potentially shifting a few days into the ‘worked from office’ column, and resulting in a lower overall deduction for WFH expenses.