While a big tax refund might feel like a windfall, financial experts generally agree that it is not ideal from a personal finance perspective. It essentially means you have overpaid the government throughout the year, effectively giving them an interest-free loan with your money.
How do tax refunds work in Australia? Over 14 million people lodge a tax return each year in Australia. Of those who receive a refund (approximately two-thirds), self-preparers received an average of $2,576 in 2022, while tax agent clients received an average of $3,550.
Many are wondering if the Income Tax Department delays processing refunds if the refund amount is large, such as over Rs 50,000. According to income tax rules, there is no upper limit on refunds. Whether your refund is Rs 10,000 or Rs 1 lakh or even greater, it will be credited the same way.
Does a Large Refund Trigger an Audit? Not necessarily. But if the refund is a result of fraudulent claims, such as inaccurately reporting income or claiming deductions you're not actually eligible for, then it can trigger an IRS audit.
How to avoid paying higher-rate tax
Yes, $80k AUD is a good salary in Australia, placing you above the median income, allowing for a comfortable life in most areas, but it becomes tighter in expensive cities like Sydney where rent is high. It provides a solid income, but its value depends heavily on your location and lifestyle, with significant differences between major cities, regional areas, and whether you're single or have dependents.
Audit rates are generally highest for high-income taxpayers, taxpayers with business income, large corporations, and earned income tax credit claimants. In its annual data books, the IRS presents audit rates for tax returns filed for each year over the previous decade.
Not reporting all of your income is an easy-to-avoid red flag that can lead to an audit. Taking excessive business tax deductions and mixing business and personal expenses can lead to an audit. The IRS mostly audits tax returns of those earning more than $200,000 and corporations with more than $10 million in assets.
Top IRS audit triggers
Receiving a large tax refund is often a bad thing because it means you overpaid taxes throughout the year and gave the government an interest-free loan instead of keeping and using your own money month by month.
It boils down to this: If you're getting a sizable refund just about every year, and you're having federal taxes held out of your pay, then you're probably having too much held out for federal taxes. So, when you get a big refund, you're just getting your own money back.
How to maximize tax return: 4 ways to increase your tax refund
A $75k salary in Australia is decent, above the median income for many age groups and allowing for comfortable living in regional areas, but it can be tight in expensive cities like Sydney or Melbourne, especially for families, with many feeling $100k is needed for stability, though it's a strong starting point for younger professionals. After tax, $75k becomes roughly $58.6k ($4,888/month), meaning lifestyle, location, and financial goals (like saving for a house) heavily influence whether it's considered "good".
10 Ways to Maximise Your Tax Refund
How often does the ATO audit individuals? ATO audits for individuals are relatively rare, but the ATO conducts many reviews each year. These are less formal than audits and often target high-risk areas like work-related deductions, rental properties, and undeclared income.
Failing to report all taxable income
IRS computers are pretty good at cross-checking the forms with the income shown on your return. A mismatch sends up a red flag and causes the IRS computers to spit out a bill that the IRS will mail to you (these letters don't count as audits for purposes of the IRS's audit rate).
Red flags are warning signs that something in a relationship may be unhealthy, toxic, or potentially harmful. They signal behaviours or patterns that, if ignored, could lead to emotional distress or even abuse. Common red flags include manipulation, lack of trust, controlling behaviour, and poor communication.
Most taxpayers will do anything they can to avoid tax audits. Filling out an accurate tax return is the best way to avoid an audit. Additionally, you should ensure you double-check your math and only claim legitimate tax deductions. E-filing may also be helpful.
There's no cap on the amount of refund you can receive, and refunds above ₹50,000 are normal and legal. Just ensure that your TDS and income declarations match and that your return is filed accurately and verified on time.
Married filing jointly filing status
This status has the highest standard deduction and some of the most beneficial tax rate brackets. You file together and report combined income, along with your combined deductions and qualifying credits on the same return.
The IRS usually reviews receipts during an audit — if you don't have the receipts, you can sometimes use bank statements or credit card statements to prove your claims instead. Consequences of being audited without receipts can include additional taxes, interest, and financial penalties.
The average Australian full-time worker is now earning more than $2000 a week for the first time in history. New figures from the Australian Bureau of Statistics (ABS) show the average ordinary full-time weekly earnings for adults hit $2011.40 before tax in May.
Most Americans Earn Far Less Than $100k
According to last year's YouGov data, only 18% of U.S. adults earn more than $100,000 annually. And the biggest earners are mostly men—25%—and those aged 35 to 44—25%. For comparison, just 12% of women make six figures.
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If you make $90,000 per year, your salary per hour is $45. 55.