The 'instant tax refund' that could cost you
Being in a hurry at tax time can saddle some people with an unexpected debt. We're just a few days away from the end of the financial year and, like most people, you're probably keen to get your tax refund as quickly as possible.
You might see ads offering a "same-day tax refund" or "instant tax refund". If that sounds too good to be true, that's because it is!
A same-day tax refund commonly involves a short-term loan, with high interest and fees. Using that sort of service, you'll almost always end up worse off in the long run.
High costs and hidden fees
Instant tax refund agents often charge a standard fee, plus around 10% of your refund to get it the "same day".
So if someone has a tax refund of $2000 this year they might pay a $130 tax agent fee plus a $200 "same day" charge, meaning their basic tax return cost them $330 and they get only $1670 as a refund. But it gets worse.
Something goes wrong - you end up out of pocket
If the tax office adjusts your refund or withholds money, instead of getting your $2000 (minus fees) you could end up owing the ATO money.
It's not uncommon. In that case, not only do you have to pay back your instant tax refund loan, you'll also be stuck with additional late fees and charges.
In serious cases, people can wind up paying more than their total refund, all to the instant refund operator due to costly late fees hidden inside a legal contract.
The better (and safer) way to do your tax return
Before even considering an instant tax refund contract, ask yourself:
- Can I wait about a fortnight like everyone else?
- Can I afford to pay super high fees just to get my money today?
Most Australians receive their tax refund within six to 10 business days.
To avoid getting stung with high fees or late charges, go through a reputable tax agent who charges one transparent lodgement fee.
For more information on instant refunds, visit our website.