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A refund isn't a bonus from the government — it's your own money coming back because too much tax was withheld from your pay during the year. Your employer withholds PAYG tax each payday based on estimates. At tax time your actual tax is worked out on your real income, deductions and offsets. If the withheld amount was more than the actual tax, you get the difference back; if it was less, you owe.
Three levers do most of the work. Deductions reduce your taxable income — work-from-home hours (70 cents per hour under the fixed-rate method for 2025–26), car and travel for work, self-education, tools, union fees and donations. Offsets reduce the tax itself dollar-for-dollar — the Low Income Tax Offset and, for eligible seniors, SAPTO. And the Medicare levy (2% of taxable income) plus any Medicare Levy Surcharge for higher earners without private hospital cover can turn an expected refund into a bill.
On an $85,000 salary, your income tax plus the 2% Medicare levy comes to roughly $17,990 for the year. If your employer withheld about $19,200 in PAYG across the year, you'd be due a refund of around $1,200. Claim a genuine $1,500 of work-related deductions and your taxable income drops to $83,500, cutting the tax owed by roughly $450 (your 30% marginal rate) — lifting the refund to about $1,650. Every legitimate deduction is worth your marginal tax rate back, which is why keeping receipts matters.
Tax returns for the year ending 30 June open in July and are generally due by 31 October if you lodge yourself, or later if you use a registered tax agent. The ATO pre-fills much of your income data by late July, so lodging a little later often means fewer mistakes. Refunds usually arrive within about two weeks of lodging online.
Can I claim deductions without receipts? You can claim up to $300 of work-related expenses without written evidence, but you must have actually spent the money and be able to explain how you worked it out.
Why did my refund shrink compared to last year? The end of the low-and-middle-income tax offset in earlier years, higher income pushing you into a new bracket, or a HELP/HECS repayment obligation are common causes.
Does a HECS-HELP debt reduce my refund? Yes — compulsory repayments are calculated on your income and collected through the same return, which can offset what you'd otherwise get back.
This calculator uses current published rates from Australian government and regulator sources. The result is an estimate for general guidance — it does not constitute personal financial advice. For decisions about your circumstances, consult a registered financial adviser, tax agent, or other professional. See editorial standards for how DecisionLab sources and updates its calculator data.