Many taxpayers are seeing smaller refunds in 2025. Below are the main reasons and the checks clients should make before lodging.
Why refunds are smaller
• Low and Middle Income Tax Offset ended after 2021–22, removing up to $1,500 for many taxpayers.
• HECS/HELP repayment settings changed: a one-off 20% debt reduction at 1 June 2025, indexation capped at the lower of CPI or Wage Price Index, and a raised repayment threshold of $67,000.
• ATO data-matching has widened to include banks, STP, crypto exchanges, gig platforms and property records, increasing detection of undeclared income.
• Private health insurance prefill timing can cause incorrect or missing rebate data if returns are lodged before funds finalise their feeds.
• Lodgement timing and stricter penalties mean rushed or early lodgements often trigger reviews and adjustments.
What to check before lodging
• Wait for finalised prefill for STP and private health insurance where possible.
• Reconcile all income sources: PAYG, dividends, interest, rental, gig economy, crypto disposals.
• Verify HECS/HELP debt balance and repayment calculation based on the $67,000 threshold.
• Confirm entitlement to any remaining offsets and tax credits.
• If unsure or if complex income exists, use a registered tax agent to extend lodgement and reduce risk.