Where Did My Tax Refund Go?

Why Tax Time Feels Different Now

This article is based on Australian tax law applying to 2025–26 individual income tax returns. It contains general information only and doesn’t take your individual circumstances into account. Tax laws change regularly, so always seek advice from your registered tax agent if you’re unsure how the rules apply to your circumstances.

There was a time when people came in to have their tax return prepared reasonably confident there would be something waiting for them at the end.

Maybe $500.

Maybe more.

It might pay the winter electricity bill, replace the tyres on the car, go towards a holiday or simply give the household budget a little breathing room.

These days?

Sometimes I pre-fill a client's income information and they're already looking at a tax bill before I've entered a single deduction.

And after 27 years preparing tax returns, I can tell you that tax time feels very different to what it once did.

So what changed?

The answer isn't one single thing.

It's lots of little things that have slowly added up.

Let's Start With the $18,200 Tax-Free Threshold

Australia's tax-free threshold increased from $6,000 to $18,200 on 1 July 2012.

And there it has stayed.

Think about what has happened to the cost of living since 2012.

Wages have increased. Groceries have increased. Electricity has increased. Fuel has increased. Housing has certainly increased.

But that $18,200 hasn't moved.

As incomes rise while thresholds and other parts of the tax system don't necessarily move at the same pace, more of a person's income can become subject to tax.

There have also been changes to tax brackets, offsets and Medicare levy thresholds over the years.

Individually, each change can look relatively small.

Collectively, people notice the difference when their tax return is prepared.

And then I found this photo...

When I went looking for an accounting photo for this week's blog, I found an old Tax Tips photo of me holding my calculator.

I hadn't even noticed what was displayed on it until we looked at it again.

18,200.

Apparently Past Brooke was already talking about the tax-free threshold not increasing.

I don't even remember when I created the original post, but clearly I've been having this conversation for quite some time.

A rather funny full-circle moment, although perhaps not quite as funny when you realise the number still hasn't changed.

A Tax Deduction Doesn't Mean You Get the Money Back

This is probably one of the biggest misconceptions I hear.

If you spend $100 on something that is legitimately tax deductible, you don't get $100 back.

The $100 deduction reduces your taxable income by $100.

For someone whose marginal tax rate is 30%, that deduction may reduce their income tax by around $30, with the Medicare levy potentially also affecting the overall calculation.

That's very different from receiving your $100 back.

Which is why I never encourage people to spend money just to get a tax deduction.

If you genuinely need something for work and it's deductible, that's different.

But spending $100 simply to save a portion of it in tax still leaves you out of pocket.

Employees Are Often Being Provided With More

Another change I've noticed over the years is what employers provide their employees.

Small businesses are doing it tough too, and retaining good employees matters.

Some employers provide uniforms, phones, motor vehicles or other work-related items. Others pay allowances.

That's good for the employee, but it can also mean there are fewer out-of-pocket work expenses left for them to claim personally.

Again, that's not necessarily a bad thing.

But it does change what someone's tax return looks like compared with years gone by.

Some Tax Offsets Haven't Kept Up Either

One that particularly frustrates me is the Zone Tax Offset.

Long before I ever lived in Central Australia, and long before I imagined I'd become an accountant, I remember watching Getaway as a teenager when they visited Uluru.

They mentioned the tax concession available to people living and working in remote Australia.

It stuck in my mind because the concept made sense.

Living remotely could cost more, so the tax system provided an incentive or concession recognising that.

Then I ended up spending 15 years living in Alice Springs myself.

For eligible taxpayers meeting the relevant residency requirements, the maximum basic Zone A offset is still $338.

For eligible taxpayers in a Special Area like Uluru, the maximum basic amount is $1,173.

Those basic amounts haven't increased during my entire working life.

Anyone who has lived remotely knows how quickly additional costs can add up.

I still remember the price of bananas after a Queensland cyclone disrupted supply. When your child wants bananas and they're around $34 a kilo, you become very aware of the cost of getting everyday things into remote Australia!

A concession designed partly to recognise the realities of remote living loses some of its usefulness when the amount remains unchanged for decades.

So What Can You Actually Do?

We can't personally rewrite the tax system.

But there are things you can do during the year to reduce the chance of a nasty surprise at tax time.

Check that enough tax is being withheld from your wages.

This is particularly important if you have a HELP debt. Make sure your employer knows about it and that the appropriate withholding is occurring.

If you're uncertain, ask.

I've often told clients to email me a payslip so I can check the withholding rather than waiting until their tax return is prepared and discovering there's a large bill.

Consider voluntary extra withholding.

Some people deliberately ask their employer to deduct a little extra tax each pay.

An extra $10 per week is $520 over a full year.

All other things being equal, that additional withholding is then sitting there as a credit when your tax return is prepared.

Is it the most sophisticated investment strategy in the world?

No.

But for someone who knows they'll spend the $10 if it lands in their bank account, it can act as a simple form of forced saving.

Remember income that may not have tax withheld.

Bank interest and investment income can affect your final tax position.

If you regularly receive income where insufficient tax is withheld, you may be able to make voluntary payments or arrange additional withholding from your wages to help cover the eventual liability.

The important thing is knowing about it before tax time rather than being surprised afterwards.

And Then There Are Donations

This one deserves a blog of its own, because there is plenty to talk about.

But charitable giving is something I personally value.

Where a donation is made to an eligible deductible gift recipient and meets the tax rules, it can also provide a straightforward tax deduction.

And small regular amounts add up.

A $30 monthly donation becomes $360 over a year.

You're supporting an organisation or cause you genuinely care about while potentially creating a legitimate deduction for your tax return.

That's very different from buying something you don't need purely because somebody told you it was "tax deductible."

There are rules around deductible gifts, of course, and not every payment to every organisation qualifies. That's a conversation for another Accounting Library post.

What If You Do End Up With a Tax Bill?

First: don't panic.

A tax bill doesn't automatically mean something has gone wrong.

It may simply mean there wasn't enough tax paid throughout the year compared with your eventual tax liability.

Understanding why the bill occurred is much more useful than simply being annoyed that there is one.

It gives you the opportunity to make changes for the following year.

And timing can matter too.

Individuals lodging their own tax returns generally have an earlier lodgment deadline, while eligible clients lodging through a registered tax agent may have access to later lodgment dates under the tax agent lodgment program.

Your individual circumstances and due dates matter, so speak to your registered tax agent rather than assuming a particular date applies to you.

Maybe Tax Time Isn't What It Used to Be

I've always joked that having your tax return prepared should be better than going to the dentist.

These days, you do have to wonder.

But I don't want people to become frightened of tax time.

I'd rather you understand it.

Know what your deductions actually do.

Check your tax withholding during the year.

Understand how other income might affect you.

Keep the records your accountant needs.

Ask questions when something doesn't make sense.

And please don't measure whether your accountant did a good job purely by the size of your refund.

A large refund isn't necessarily a win, just as a small refund, or even a manageable tax bill, doesn't necessarily mean something went wrong.

The goal should be to understand where you stand.

Because when it comes to tax, finding out what's happening before 30 June is usually much more useful than discovering it afterwards.

And apparently, judging by that old calculator photo, Accountant Brooke has been saying versions of this for quite a few years.

Some things change.

Some things, including that $18,200 tax-free threshold, apparently don't.

Be real, not perfect. Be Kind. Be Brave. Be Yourself.