Need Advice: How to Get My $8000 ATO Credit Refunded (Stuck Because I Used Coles Mastercard Gift Cards)

Lmugpink on 06/02/2025 - 00:42
Last edited 06/02/2025 - 00:58 by 1 other user

Hi OzBargainers, I need urgent advice or insights from anyone who has dealt with a similar situation.

In 2024, I prepaid a few thousand dollars into my ATO account using Coles Mastercard gift cards from a previous deal. After lodging my tax return, my account now shows an $8000 credit balance. However, the ATO has refused to refund the amount to my bank account. Instead, they’ve given me two options:

  • Refund to the original gift cards (which I’ve already discarded).

  • Leave the credit in my account to offset future tax liabilities.

A tax accountant suggested I could take on a second job and ask the employer not to withhold tax, allowing me to use this balance against my tax obligations in the next financial year.

Has anyone been in this situation before? I found a previous post on this topic, but no clear solution was provided. Would really appreciate any advice on how to proceed!

Financial Gift Card InComm MasterCard Prepaid Card

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Australian Taxation Office
Australian Taxation Office

Comments

  • trapper on 06/02/2025 - 00:47
    +12

    How the hell did you manage to over pay by $8k, that is just wild.

      • AustriaBargain on 06/02/2025 - 04:28
        +11

        Were those points worth all this stress and planning and thinking?

        • CyberMurning on 06/02/2025 - 08:51
          +5

          well, worth for the audience for sure, we all are having fun here except the OP

  • Benoffie on 06/02/2025 - 00:54
    +3

    Who on earth ever pays the ATO anything and expects it back? 🤔😂

  • JIMB0 on 06/02/2025 - 01:13
    +3

    If you do find a way to end up owing $8k there's a chance they'll put you on an installment plan in future and you'll need to pay up $2k quarterly and be stuck in the same situation next year.

    You could buy some overseas ETFs that have a high dividend yield which you'll owe tax on. Also
    if you've got private health insurance make sure to claim the full rebate.

    Another way is to take up higher education with a HELP loan. Then you can transfer the money over to the loan, you'll need to call up and they'll hate you because for each transaction they need to manually transfer it.

  • Sye on 06/02/2025 - 01:17
    +4

    @MS Paint does this count as ADAGCHS?

    • MS Paint on 06/02/2025 - 06:26
      +4

      IMHO yes but I do require an official judgement by @mapax.

      • mapax on 06/02/2025 - 07:34
        +8

        Confirmed.

        Starting to sweat a little, I think that’s 3 out of the 5 for the name change and there’s still 3 days left in this week…

    • Jono05 on 06/02/2025 - 19:20

      OP FAFO (f’d around and found out).

  • Sye on 06/02/2025 - 01:21
    +23

    I had this same problem. It was all solved when the ATO man called me and said he could refund me and I just had to let him remotely connect to my computer and then buy some iTunes gift cards.
    /$

    • mugpink on 06/02/2025 - 01:22
      -8

      is this supposed to be FUN ?

  • Dollar General on 06/02/2025 - 05:17
    +2

    Ask for a cheque

  • MS Paint on 06/02/2025 - 06:30
    +16

    Are you a PAYG employee? If so, what you have done makes absolutely no sense at all.

    I believe it's quite popular in Ozbargain forum or australianfrequentflyer - we got the points/ discount from the gift cards and used them to pay ATO

    Don't blindly follow what randoms on the Internet do.

  • brendanm on 06/02/2025 - 07:20
    +5

    So you are just a normal PAYG employee who would normally get a tax refund, but you thought you should give the ATO a few grand extra using gift cards?

    • mskeggs on 06/02/2025 - 07:27
      +16

      Play stupid games, win stupid prizes.

      • MS Paint on 06/02/2025 - 07:30
        +9

        This odd move would definitely be seen as an attempt at money laundering in the eyes of the ATO.

        • [Deactivated] on 10/02/2025 - 23:13
          -2

          Laundering clean money? Lol.

  • SBOB on 06/02/2025 - 07:25
    +4

    Leave the credit in my account to offset future tax liabilities.

    Better start making some capital gains potential investments.

    You got your gift card discount and whatever cc points reward. This is the side effect.
    The ATO thanks you for their $8k interest free loan

  • CyberMurning on 06/02/2025 - 07:36
    +1

    Word ato and ozb should not be on the same sentence

  • mskeggs on 06/02/2025 - 08:04

    Lodge a tax return in July and nominate your bank account for any return.

    • CyberMurning on 06/02/2025 - 08:49

      what is there is no return but OP need to pay?

      • mskeggs on 06/02/2025 - 08:55
        +1

        Then the $8k will go towards that tax expense.
        Op made an error, and has an opportunity cost compared to what they could earn from investing that money for 5 more months.
        Assuming 5% saving account return, that is about $167 before tax.
        With this complex taxation affairs, I think it is reasonable to assume OP is in the top tax bracket, so would pay 49% tax on that foregone income, so their net loss is $85.

        I admire their determination, but I would never have admitted this mistake with the possible benefit from the admission only $85!

        • MS Paint on 06/02/2025 - 09:03
          +5

          You forgot about the free toaster with all the points accumulated.

          Also, just a hunch, I don't think OP is in the top tax bracket.

    • mugpink on 06/02/2025 - 09:52
      -1

      Hi, the issue is ATO won't return to nominated bank account. Payments made by gift cards have to be returned to the original cards - that is their new policy starting from late 2023.

      • mskeggs on 06/02/2025 - 10:00
        +1

        Will you have no tax obligations this financial year? Will you have earned less than $20k?

        • mugpink on 06/02/2025 - 10:31

          Hi, my annual salary is ~ 100k - and the company normally withholds 30% each paycheck so I dont think I have much of tax obligations upon tax return lodgement.

          To lower the amount that the company withholds, here are two options I found - do you have any ideas?

          • Adjust this form (https://www.allianzretireplus.com.au/content/dam/onemarketin…) - vary the tax offset and send back to my employee

          • Applying for PayG witholding variation directly with ATO (https://www.ato.gov.au/forms-and-instructions/payg-withholdi…) ?

          Thanks!

          • mskeggs on 06/02/2025 - 10:37
            -1

            @mugpink: When you pay taxes it will reduce the credit first. Then it will appear that you have paid too much PAYG, So will get the usual refund plus your overpayment.
            That is what the option to offset future liabilities means.

          • cloudy on 06/02/2025 - 11:23
            +1

            @mugpink: Yeah, definitely try to adjust the PAYG withholding with your current employer. Not sure if you can,but that’s probably the best way.

            I also over paid a while back, not nearly as much as you, and got the same advice, which was fine, I just waited another year to offset some gains.

          • brendanm on 06/02/2025 - 11:25
            +3

            @mugpink: Lol holy crap you don't even have a tax bill, why would you give the ATO money, especially in gift card form?

            • MS Paint on 06/02/2025 - 11:30
              +4

              @brendanm: Because everyone on ozbargain and australianfrequentflyer is doing it. Why aren't you?

              • brendanm on 06/02/2025 - 13:17
                +1

                @MS Paint: Brb, buying gift cards so I can transfer $8k to the ATO, then come July they'll owe me $12k that I can never get back 😂. At least I'll have $50 worth of credit card points.

  • Fredfloresjr on 06/02/2025 - 09:22
    -1

    I knew its Thursday when post like this is available at Ozb Forum.

  • Seraphin7 on 06/02/2025 - 09:52
    +1

    Albo thanks you for providing him with this interest free loan. He promises to spend it wisely. 🤣🤣🤣

    • Jono05 on 06/02/2025 - 20:49

      Albo has nothing to do with the ato.

  • MeatyOne on 06/02/2025 - 10:39
    +1

    Hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaha

    Thanks for making my morning. When saving money isn't saving money. Love it.

  • star-ggg on 06/02/2025 - 10:42
    +2

    Yeah, ATO isn't interested in laundering your money

    • moar bargains on 06/02/2025 - 14:50

      Ikr! Money laundering laws require refunding to the same method of payment. Staggers me how many people don't know this, and that the ATO only relatively recently closed this loophole.

  • DingoBilly on 06/02/2025 - 11:09
    +1

    Ooof. So you paid ~$500 in lost interest to give your money to the ATO and hope they'd pay you back so you can earn some frequent flyer points…

    Sounds like a losing deal in most outcomes.

  • donkcat on 06/02/2025 - 11:14
    +1

    Lol OP clearly thought this was a clever fool proof way to turn the 7.5% saving on the Coles MC plus FF points to cash. I hope you were also one of the ones hiding the cards around Coles

  • ihbh on 06/02/2025 - 11:36

    Realise a capital gain - stock markets and many shares at all time high, even crypto.

  • Shadowsfury on 06/02/2025 - 11:38
    +1

    I've done this before many times but I've also always calculated an estimate of what I'd owe to ensure I'd use it up. Also used to it it when I wanted to manually pay off some of my HECS debt.

  • [Deactivated] on 10/02/2025 - 23:20
    -1

    Most fool proof method would be to get a part-time job and declare tax free threshold. You’ll be on around 35% marginal tax rate so just need about $23,000 of income. If you can pick up 20 hours a week at $30/hr you’ll get your money back by the end of the year.

    To change your PAYG withholding you’d need to request an agent over the phone. The forms just work off of declared income, they don't care if you have extra cash in the account.

  • Jstrrrr on 02/03/2025 - 13:36
    +1

    Trying showing the tax credit to your employer on an official ATO letterhead. See if your employer can simply withhold some tax for a few months on this basis. It may just be a few button clicks for them.

  • cheekymonkey97 on 02/03/2025 - 13:48

    I would just resubmit my Witholding declaration to my employer and tick "yes" for question 5 to claim the tax‑free
    threshold and then resubmit with "no" once I've used up the 8k credits.

    • kanga91 on 03/03/2025 - 10:28

      If it's your only job it will already be getting claimed

      • cheekymonkey97 on 03/03/2025 - 13:57

        Oh man I had a lapse of judgment you’re completely right

  • Peza on 03/03/2025 - 11:31
    +2

    the options as i see them are:

    1) Be wary of varying the PAYGW to much.. This could be assessed on this years tax payable.. so you if you underpaid PAYGW, you could face penalties.. the fact you have a credit balance is not relevant.(although you could argue this with all the facts, but do you want an another fight that would drag out months?)
    Around 15-20% variance of your actual tax payable (total for the year) should be safe.. So if you have 30K tax payable for the year, you could safely vary down to about 25K for the year.. given we are closing in onto 30 June, you could vary enough for the rest of the year to meet your target.. you do the calculations what that means to you.. but 5k variance in 4 months (ie 30k to 25k) = $1250 less tax payable per month roughly.. By your last pay for the financial year, you end up paying less tax then you should.. Lodge your tax return, you get a tax bill for 5k tax which is immediately offset by the 8K. You could go more, but that is up to your risk tolerance.

    2) call the ATO again and ask for the credit balances/voluntary payments to be refunded to the nominated bank account on file (make sure its your account and not your agents).
    Failing that, ask for the issue to be escalated to a superior/specialist.
    You are not asking to be refunded , you are asking for the total voluntary payment you made to be repaid to the account on file. Get reference numbers and names for everyone you speak to and explain you don't have the cards anymore, and the tax credits would take years to be offset against any liabilities as you are a PAYGW only and tax is withheld every pay.
    Failing having the issue resolved, raise a complain with the info (ref numbers etc). Make it clear these were voluntary payments and you have worked out that you wont be having a tax liability to pay of that amount, so you want your money back. (and you dont have the original payment method anymore)
    This could all take time and you cant start varying if you get the full refund..

    You can do the variance for 2025 and get the 5k offset, and then argue the remaining 3k after the 2025 tax return has been sorted, or take up the fight now for the whole 8K.

    Sometime you need to speak to someone who actually knows what they are doing, and that means you might need to make more than 1 call.

    Hope it gets sorted

    • mugpink on 03/03/2025 - 14:20
      +1

      Hi @Peza,

      I appreciate your comments and suggestions on my post.

      In fact, I followed your advice last year. I contacted the ATO multiple times (around 20 calls), then filed a formal complaint with them. After that, I escalated the matter further by lodging another complaint with the Inspector-General of Taxation and Taxation Ombudsman. The entire process took me months to complete.

      Unfortunately, the final outcome was that they stated they could not process the payment to the nominated account. The only option available was a refund to the original payment method.

      I might have to try my luck with PayG witholding variations then.

      Cheers

  • Ave Maria on 06/03/2025 - 18:55
    +2

    Some inconsitencies here. You said you paid a few thousand using Gift Cards. How did this jump to $8K ?

    Normally, at your next lodged tax return assesment, if there is a tax overpayment you get a refund paid to the bank account registered with the ATO, regardless of how the exces got paid to the ATO. By contacting the ATO you have triggered some unecessary flags. if you paid your Income Tax at least 14 days before the due date then you get interest paid by the ATO from the day payment was made to and inclusive of the due date (but not beyond that or as part of a refund & only for the amount that you owed not for any overpayment).

    If you did not have a bank accout registered with the ATO (something you can provide when you use MyTax to lodge your income tax return) that is another potential flag and why the ATO is refusing to pay to a bank account that has not been used before or verified via MyGov/MyID.

    The best you can do is to leave the money to be used against future liabilities, get your details sorted with the ATO (identity wise) and stop messing with the ATO (and treating your income tax account as a savings account) as it would likely trigger a full audit and then you will be in real trouble (you have been warned).

    Your employeer has an obligation to pay tax based on what they pay you and according to the ATO PAYG schedule, not to adjust tax payments to account for "personal" dealings with the ATO. If you are self employeed and you manage your payroll go ahead and try your lack with the ATO and expect an audit to be scheduled in the near future on all of your company dealings for the past 10+ years (I hope you kept records of gift cards for that long).

    • mugpink on 06/03/2025 - 21:07

      Normally, at your next lodged tax return assessment, if there is a tax overpayment you get a refund paid to the bank account registered with the ATO, regardless of how the exces got paid to the ATO.

      ==> This is WRONG. I got a bank account registered with ATO, however, ATO did not refund the money back to my bank account after tax lodgement. That's why I contacted them and got the response that they will only refund to the original payment method (Gift cards).

      Thanks for the reply but honestly, I dont find it really useful.

      • Ave Maria on 06/03/2025 - 21:25
        +3

        There is a lot of OzBargain users that buy & use Gift Cards to pay their tax liability without getting hit with a surchage on credit card payments.

        Your "argument" with the ATO may result in classifying gift cards as an undesirable methof of payment, as it cannot be paid back, and block future usage of that payment method (by putting restrictions on the card BIN identifying it as a gift card).

        So good luck with getting the money retrieved (is not lost anyway), but it may have a highly undesirable outcome.

        Sometimes warning someone about unexpected outcomes can be useful (even though it may not be what you want to hear).

  • scanuck on 09/03/2025 - 05:53
    +1

    It sounds as if you didn’t have a liability at all - so there was nothing to ‘pay’

    Resubmit your tax form to work and don’t claim the tax free threshold - you won’t get your money back til next year but safest option

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