It’s tax time again and there are plenty of promotions for “instant” or “same day” tax refunds. It might seem like an attractive option especially when you need money quickly at this time of year, but beware that you could get stung if things don’t go according to plan.
Here’s how an “instant” tax refund works.
First it’s important to understand that many of the companies promoting instant refunds are not actually issuing a refund. Only the ATO can do that.
What you’re really getting with an “instant” tax refund is a short-term loan. The concept is that when you receive your refund, you will pay it directly back to the company to pay off your debt. The problems start if you later get a message from the ATO that your refund has been withheld for any reason (e.g. you didn’t declare your Centrelink debt). You will now be in debt to the tax refund business and you will begin to accumulate interest until the debt and related fees are paid off. Because this is a short-term loan, it is likely to have a high amount of fees and interest attached to it so you may find yourself significantly out of pocket and in serious financial stress.
The question is do you really need the money right now? The majority of tax returns are payed out within 6-10 business days. Putting off having the money now for a little over a week could save you lots of money and stress down the track.
The best alternative is to get in contact with us at Proactive Accounting & Financial Services and let us complete your tax return. This ensures you will get as much back from the tax office as possible, plus, the refund will go straight into your bank account.
An “instant” tax refund is not what it seems. If you need money quickly perhaps consider other forms of borrowing or you could end up seriously out of pocket.