Tax return owing reason unknown

OnepunchDan on 17/09/2023 - 02:16
Last edited 17/09/2023 - 10:49

This is the 1st time I had to pay the ATO money during my tax returns for the FY 23.
If it was a small amount I don't mind but it's a whopping $3.5K+!
How on Earth can I owe that much?
I don't earn 6 figures and the only thing I can see is the extra interest I've earnt compared to last year as the rates jumped from 2% to 5%. Estimated to be close to 6K of interest.
I was also paid out for unused annual leave before I left my job.
Unless the company under withheld I don't see how earning 6K of interest can cause me to owe $3.5K of tax?> 50%?
Any ideas? Is this a mistake by the ATO?
P.S. I still owe about 3K of student loans which I think might be wiped out after I lodge the return.

Update to questions in forum:
-yes I supplied TFN to all banks
-I left old job before starting new job.
- all my jobs have witheld STSL to cover HECS in payslip.
- I handle all my tax returns on my own as I don't own a business or have alot of financial assets

Financial

Comments

  • Hybroid on 17/09/2023 - 02:33
    +13

    Sounds like you need a trip to a tax agent for advice. How would we know your specific situation?

    • OnepunchDan on 17/09/2023 - 11:07

      I literally asked the ATO if they knew how it was calculated and even they weren't too sure. I was hoping to get some friendly knowledge from the forum as I believe this could be a common scenario for many low to middle income workers and they may benefit from it as well after getting a bill shock.
      I did supply the main pieces of info in the description.

      • Hybroid on 17/09/2023 - 11:09
        +2

        ATO are not going to calculate your specific scenario. There are lots of factors that could affect it and differ from one person to the other. That's what a tax agent is for.

        • OnepunchDan on 17/09/2023 - 11:12
          -1

          Then what is the ATO for then? How do they know if the calculations is right or wrong? How can they even validate it?

        • scanuck on 17/09/2023 - 11:34
          +1

          This is literally what the ATO do

          It’s still ludicrous to me they know everything about you yet still make submit a return and will fine you if you get something wrong

  • hasher22 on 17/09/2023 - 02:45
    +5

    You need to see a tax agent, but hypothetically your interest may have played a significant part.

    Example:
    If you earned 50k and taxed $7500 your return is $33 but if you earned 56k (interest included), 3k of hecs and taxed $7500, you owe $3,247 to the ATO.

    This is a very simple calculation from an online 22/23 tax calculator.

    If you want this figure reduced, find all the deductions you can claim, thus seeing a tax agent.

  • bobbified on 17/09/2023 - 03:07
    +3

    Estimated to be close to 6K of interest

    If you provide your tax file number, the bank doesn't withold any tax. So at tax time… marginal rate of 32.5%+2% medicare levy = $2,070 in tax payable.

    I was also paid out for unused annual leave before I left my job.

    How much was this? Some companies will withold tax as though you get that amount "every pay period" (hich results in a higher amount of tax witheld). And some companies will tax it as a once-off - which will result in a lower amount of tax witheld. And that can then result in additional tax payable at tax time.

    I still owe about 3K of student loans

    Did your company withold additional tax for HECS? (Did you tick the HECS box on the tax form when you started working at that company?). If you have a HECS debt, earn over the threshold and didn't tick the box, that will result in you having to pay additional tax towards your HECS debt.

    • [Deactivated] on 17/09/2023 - 11:45

      Came here to say the same thing. All 3 of these things will be the factor.

  • ForkSnorter on 17/09/2023 - 07:49

    $6k interest = $2k tax. Medicare contribution ~$1k.

    • OnepunchDan on 17/09/2023 - 10:57

      I think the HECS is part of it. Otherwise I would be owing 3K every tax return assuming interest stays the same which is annoying.

      • foxmulder on 17/09/2023 - 13:09

        ATO may assume you owe the same amount you will owe and ask you to pay the 3K in quarterly instalments thus at next year tax return you should not pay as much.

  • ihbh on 17/09/2023 - 08:03

    it's a whopping

    Relax, if you're not incurring any GIC, it's not whopping.

    PS: Did you commit any GST scam recently?

  • deme on 17/09/2023 - 08:41

    I was also paid out for unused annual leave before I left my job.

  • brendanm on 17/09/2023 - 09:05
    +4

    You owe money as you haven't paid the correct amount of tax for the income you have made during the financial year, it's quite simple. I would much rather owe money than get a tax return, you've had an interest free loan for months.

  • jjjaar on 17/09/2023 - 09:18
    +1

    P.S. I still owe about 3K of student loans which I think might be wiped out after I lodge the return.

    If it’s not wiped, pay it off completely to avoid indexation in June and to be able to stop your employer withholding this amount for tax.

  • foxmulder on 17/09/2023 - 09:33

    Any second job this year? If this is, could be from not declaring it as second job to get higher tax. How about that annual leave payment, does it taxed properly too?

  • Eeples on 17/09/2023 - 10:02
    -1

    Did you provide your TFN to the place that you earned $6000 in interest?

  • JIMB0 on 17/09/2023 - 10:23

    Did your annual leave get paid out while you were still working there or as part of your last pay after leaving? If the latter then there is a tax concession on it. Did you use a tax agent to file your return or do yourself?

    • OnepunchDan on 17/09/2023 - 11:01

      Started my new job the very next week after I quit. All payment would be after I left.

  • sss333 on 17/09/2023 - 11:52
    • all my jobs have witheld STSL to cover HECS in payslip.

    Do you have reportable fringe benefits? They still impact the amount you have to repay for HECS even though you don't pay tax on it

    • OnepunchDan on 17/09/2023 - 15:08

      No fringe benefits…

  • donga100 on 17/09/2023 - 11:56
    +3

    I left old job before starting new job.

    Did you claim the tax free threshold from both jobs? Sounds like it.

    • plowry1977 on 17/09/2023 - 12:14

      Imagine this might be reason, new employer maybe didn't consider your previous role, and you didnt pay enough tax.
      When completing online, by updating you can usually work out where you getting hit

    • OnepunchDan on 17/09/2023 - 15:09

      Yes I did. But both employers withheld tax from my pays. It should work out what the correct amounts are right?

      • foxmulder on 17/09/2023 - 19:33
        +1

        As i thought earlier. Your first income is payg-ed with the tax free $18000 in its calculation.

        If you have second job you should opt-in no. this way, the calculation will exclude the $18000. For the exact same wages - the second job will be taxed higher.

        • OnepunchDan on 17/09/2023 - 22:08

          R U saying that my new employer taxed the first $18K less and went from there? Meaning every new job I have I should tick don't claim tax-free threshold even if I've left my other job(s)?

          • foxmulder on 17/09/2023 - 22:17
            +1

            @OnepunchDan: Any employer will use ATO payg calculator, they do not use their own. You can see yourself the difference in ATO tax withheld calculator.

            For any job that gives you more money, you claim the Tax Free Threshold, for your less money job you tick No in that calc.

            This video explains best about Tax Free Threshold.

          • donga100 on 17/09/2023 - 22:23

            @OnepunchDan: You don't need to pay tax on the first $18k you earn each financial year. Rather than tax you nothing at the start of the year and then tax you more later they calculate what the expected rate of tax will be for the year and tax you the same all year round. You should only claim the tax-free threshold from one employer each financial year. Now that we're in a new financial year you might as well leave it the same with your current employer but if you change jobs again or get a second job don't claim it. Or, DO claim it, earn interest on the extra money you get paid and then be prepared to pay it back when you do your tax return.

      • donga100 on 17/09/2023 - 21:12

        It should work out what the correct amounts are right?

        No, but it will be OK this year if you stay in the same job.

  • Mokr on 17/09/2023 - 12:06

    Claim more deductions. Notebooks etc.

  • Morien on 17/09/2023 - 13:54

    Changes made to Low Income Tax Offset this year. Perhaps that has affected you?

    • OnepunchDan on 17/09/2023 - 14:34

      That has definitely impacted me and prob millions of others this year. I saw this on the news. But I don't think it's the only reason why the tax owing is so high.

  • mbck on 17/09/2023 - 13:54

    6 +6 is 12. 30 percent is about 3k.

  • Pufff on 17/09/2023 - 14:26

    There are so many possibilities.
    Payout from old job, interest earnt, MLS? don't need to be on 6 figures for that, higher pay in new job? Earning more means you pay more HECs as well. So it may look like tax but it in fact goes towards your HECs.
    BTW not giving a TFN would decrease tax because the provider would have withheld more than if you did give a TFN.
    Also all you need to look at are income, deductions, offsets and total tax. If the ATO system is wrong for end of year then the whole country would be in turmoil already.

    • Zeph101 on 17/09/2023 - 15:55

      What is your total wages income tax withheld and interest income?

      That would be where id start to look and then see if the tax withheld was enough

  • Kpop on 18/09/2023 - 12:20
    +3

    This is more than likely a HECS issue. Although you had tax withheld from each employer for Hecs they would have withheld the correct amount based on your wage and its applicable threshold %. With the additional interest income and the lump sum paid from unused leave you prob went up a threshold in total income for the year. Ie went from 6.5% to 7%This is now being clawed back via your return with all your income for the year reconciled. So technically your payroll did the right thing each time but they are unable to take into account other income etc. check the check the ATO website for the % thresholds and you will see they scale up with income.

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