Smaller tax returns come as a 'slap in the face' to struggling Aussies

Mia from Sydney is a mum of two kids under three years old.

Last year she gave birth to her second, a girl, then went back to work four months after giving birth.

After enjoying a small tax return of $900 last year, this year she was slugged with a bill of $1800, a debt she says she “can’t really afford.”

“Daycare is now more money than I make, I’m operating at a huge loss,” she told 9news.com.au.

“All my costs have gone way up – groceries, rent, daycare, health insurance, gas and electrical bills.”

“Tax returns are an opportunity to get a little bit of relief and instead it’s another large bill.”

The LMITO, or “Lamington offset”  was a temporary tax cut for anyone earning up to $126,000, with the greatest benefit of $1500 going to those taking home between $48,000 and $90,000 in 2021-22.

The median Australian yearly salary is around $65,000, meaning half of workers earn less than that.

While many might have seen the change coming, thousands of young Aussies have been taking to social media to vent about their surprising tax bills.

Mark Chapman, a tax expert at H&R block said all tax experts were aware of the policy expiry at the end of 2022.

“People like me can shout from the rooftops, but people just have other things on their minds,” he said.

Read Related Also: Spirits manufacturers plead for government help ahead of next alcohol tax increase

“That’s just human nature and it’s absolutely understandable.”

In May, Chapman said the policy left “millions facing an effective tax increase in the current year of up to $1500”.

Now that many middle-income earners have filed their returns for the year, the reality of the change is beginning to sink in.

Like Mia and her family, another young Aussie working two jobs told 9news.com.au that the timing of the tax returns was a burden. 

Trudy said her small tax return comes as a “slap in the face”. 

She splits her working hours between a childcare centre and a café in Sydney, and said she was “very surprised” after filing her return.

She joked that she hoped to spend her tax return on “shopping”, then admitted that her study loans, rent and spending on essentials like sanitary items would have to take priority with the small amount she would receive this year.

The temporary LMITO was introduced in the 2018-19 budget, extended during the pandemic, and then increased by the Morrison government (and supported by the then-opposition) during its pre-election March 2022 budget for a single year.

Neither Labor nor the Coalition had ever planned for it to be retained for 2022-23 or beyond.

The end of the policy is now having a human impact, as economic pressure continues to weigh on families.