How to Maximise Your Tax Refund in Australia: 2025-26 Guide

About two-thirds of the 14 million Australians who lodge a tax return each year receive a refund. For the 2024-25 financial year, the average refund was $2,331, according to ATO data from early in the 2025 tax season. That figure is down from the long-standing $2,800 average, primarily because the Low and Middle Income Tax Offset (LMITO), which gave eligible taxpayers up to $1,080 in additional offsets, was permanently removed from 2022-23.

A tax refund is not a windfall from the government. It is your own money returned to you because you overpaid tax during the year through PAYG withholding. The goal is not necessarily to get the largest possible refund, but to get back every dollar you are legitimately owed. Overpaying and receiving a large refund simply means you gave the ATO an interest-free loan throughout the year.

This guide covers how to maximise your legitimate deductions and offsets for the 2025-26 return, why refunds are lower in 2025-26 than in previous years, how long the ATO takes to process your return, why your refund might be delayed, and why your refund might be smaller than you expected. For personalised advice on your individual tax return in Adelaide, our registered tax agents claim every deduction and offset you are entitled to

What Is a Tax Refund and Why Does It Happen?

A tax refund occurs when the total amount of tax withheld from your income during the year (through PAYG withholding from wages, or estimated payments from Centrelink and other sources) exceeds your actual income tax liability when your full-year return is assessed.

Your employer withholds tax from every pay cycle based on your salary alone. The ATO does not know at the time of withholding about your work-related deductions, investment losses, charitable donations, or any offsets you are entitled to. Your return is where you provide that information. If your deductions and offsets reduce your taxable income below the level your employer was withholding for, the difference comes back to you as a refund.

For most wage and salary earners, the refund is predictable within a range. Your income bracket, the deductions you claim, and any offsets you qualify for determine the outcome. The LITO (Low Income Tax Offset) of up to $700 is the most common offset for workers earning below $66,667. There is no longer a general LMITO for the 2025-26 year.

How Long Does a Tax Refund Take in Australia?

Processing times depend on how you lodge, whether there are any errors or complications, and how busy the ATO is during peak tax season (July to October).

What to Do If Your Refund Is Delayed

The ATO expects most online refunds to be processed within two weeks. If you have been waiting longer, here is the process:

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  0 to 28 business days: allow the ATO to complete processing. Check the status through myGov or the ATO app. Calling the ATO before the 30-day mark is unlikely to speed things up.
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  After 30 days: contact the ATO on 13 28 61 to ask about the delay. Have your tax file number ready. The ATO will advise whether your return is still processing, has been selected for review, or has an issue requiring your attention.
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  Return selected for review: the ATO may request additional information or documentation before finalising your return. Respond to any requests promptly and provide the documentation that your tax agent or the ATO requests.

Common Reasons Your Tax Refund Has Been Delayed

Most delays fall into one of these categories:

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  Error on your return: a typo in your bank BSB or account number, a miscalculation, a missing income item, or an incorrect deduction. Even small errors can trigger a manual review of your return.
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  Lodged before income statement was Tax ready: this is the most common cause of delays. If you lodge in early July before your employer has finalised and submitted your income statement, your return may contain incorrect or missing income figures. The ATO will need to reconcile these, which adds weeks to processing.
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  Return selected for compliance review: the ATO’s automated systems flag returns that contain deductions significantly above average for your income level and occupation. If selected, the ATO will review your return before issuing any refund.
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  Outstanding government debt: if you owe money to the ATO, Centrelink, Family Assistance, Services Australia, or other government agencies, the ATO automatically offsets your refund against those debts. The remaining amount, if any, is deposited to your account.
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  Incorrect bank account details: the ATO deposits refunds directly to the bank account registered in your myGov account. If the details are wrong, the deposit will fail and the ATO will need to resolve this before re-issuing. Check your bank details in the ATO section of myGov.
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  Tax File Number (TFN) fraud: if your TFN has been used fraudulently to lodge a return in your name, the ATO will hold the refund while investigating. If you receive a notice about a return you did not lodge, contact the ATO on 13 28 61 immediately.

10 Ways to Maximise Your Tax Refund in 2025-26

1. Claim Every Legitimate Work-Related Expense

Work-related deductions are the biggest lever most employees have on their refund. To be deductible, an expense must be: (a) directly related to earning your income; (b) not private in nature; and (c) substantiated with records if over $300 in total. Our tax return checklist covers the full list for different occupations.

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  Uniforms and protective clothing: occupation-specific uniforms (not general clothing). Deduct laundry costs at $1 per load if you wash uniform-only loads
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  Tools and equipment: tools under $300 are immediately deductible. Over $300, claim depreciation over the effective life.
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  Professional development and self-education: courses, textbooks, subscriptions, and conferences that directly relate to your current role.
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  Professional memberships and subscriptions: union fees, professional association memberships, and trade journals

2. Use the Correct Working from Home Method

For the 2025-26 return, you can claim 70 cents per hour under the fixed rate method, or actual running costs under the actual cost method. The 70c covers electricity, internet, phone, and stationery. Depreciation of equipment is claimed separately on top. Choose whichever method produces the larger deduction for your specific hours and costs. See our full working from home expenses guide for the comparison.

3. Claim Vehicle Expenses at the Right Rate

For 2025-26, the ATO's cents-per-kilometre rate is 88 cents per km for up to 5,000 km of work-related travel. You must have records of your work-related trips. Alternatively, the logbook method lets you claim the actual business-use percentage of all running costs on any distance travelled. The logbook method is typically better if you use your car heavily for work.

4. Make Voluntary Super Contributions Before 30 June

Voluntary contributions to super that you claim as a personal deduction reduce your taxable income and create a larger refund. The tax inside super is 15%, which is lower than most people’s marginal rate. At a 30% marginal rate, contributing $5,000 extra to super before 30 June saves $750 in income tax (the difference between 30% and 15%).

The concessional contributions cap for 2025-26 is $30,000. This includes employer super guarantee contributions. If you haven’t used your full cap in prior years, you may be able to carry forward unused amounts under the catch-up contributions rule. You must have a total super balance under $500,000 to use the catch-up rule. See our SMSF and superannuation services page if you manage your own fund.

5. Donate to Deductible Gift Recipients

Donations of $2 or more to organisations registered as Deductible Gift Recipients (DGRs) are fully deductible. The deduction appears in your tax return as a charitable gift. At a 30% marginal rate, a $500 donation to a DGR results in a $150 refund. Verify that the charity is registered as a DGR on the ACNC register before claiming.

6. Claim Self-Education Expenses

Courses, textbooks, and study materials that maintain or improve skills for your current job are deductible. Self-education must relate to your existing role; studying for a new career is not deductible. Eligible costs include: course fees, textbooks, stationery, travel to the educational institution, and internet costs related to the study.

7. Claim Investment Expenses

If you hold investments (shares, rental property, managed funds), you can claim expenses incurred in earning investment income. These include interest on loans used to buy income-producing investments, investment advisory fees directly related to earning assessable income, account-keeping fees for investment accounts, and the cost of managing your tax affairs for investment income.

8. Prepay Deductible Expenses Before 30 June

Under the 12-month rule, you can prepay expenses for a period of up to 12 months in advance and claim the deduction in the year of payment. This is particularly useful for: investment loan interest (prepay 12 months before 30 June to claim the full prepayment in the current year); professional subscriptions; and income protection insurance premiums.

9. Claim the Prior Year Tax Agent Fee

The fee you paid your registered tax agent for the previous year’s return is deductible in the current year’s return. This is often overlooked. If you used a tax agent for your 2024-25 return, the fee you paid them is deductible in your 2025-26 return. You do not need a receipt if the amount is under $300.

10. Lodge Through a Registered Tax Agent

Returns lodged through registered tax agents have a significantly lower error rate than self-lodged returns. Agents know which deductions apply to your specific occupation, ensure you claim every offset you are entitled to, and access the extended lodgment deadline (typically 15 May 2027 instead of 2 November 2026). The agent’s fee is itself deductible next year. For most people with any complexity in their return, a tax agent finds more than their fee in additional deductions or avoided errors.

Why Is Your Tax Refund Lower Than Expected?

If your refund is smaller than you anticipated, one or more of these factors is likely the cause:

1. Income Increased

If you received a pay rise, bonus, or additional income during the year, your tax liability increases. If your employer’s withholding did not adjust fast enough to reflect the higher income, you may have underpaid during the year and receive little to no refund, or owe money.

2. Second Job or Side Income Undertaxed

Second jobs, freelance income, Uber, Airbnb, and other side income are often not taxed at the right rate during the year. Without a specific withholding instruction, a second employer may withhold at the lowest marginal rate. At tax time, all income is combined, and the correct tax is assessed on the total. If your side income pushed you into a higher bracket, you may owe more than was withheld.

3. HECS-HELP Repayment Deducted

If you have a HECS-HELP or other student loan, compulsory repayments are triggered once your income exceeds $54,435 in 2025-26. The repayment rate starts at 1% and increases with income. These repayments are deducted from your refund (or added to your tax bill) at the time of assessment. If your employer was not withholding the HELP repayment component from your wages, the full repayment comes off your refund at tax time.

4. Outstanding Government Debt

The ATO automatically applies your refund to any outstanding debts you owe to government agencies, including the ATO, Centrelink, Services Australia, Family Assistance, and child support. The remaining amount, if any, is deposited into your bank account. You will receive a notice showing the offset amount.

5. Tax-Free Threshold Claimed at Two Jobs

You can only claim the $18,200 tax-free threshold at one employer. If you filled in your tax declaration at both jobs and claimed the threshold at both, the second employer will have withheld insufficient tax. At assessment, the shortfall is calculated against your combined income and reduces or eliminates your refund.

6. LMITO Was Removed After 2021-22

The Low and Middle Income Tax Offset (LMITO) was a temporary offset that provided up to $1,080 to eligible taxpayers. It was in place for the 2018-19 to 2021-22 financial years and was not extended. If you are comparing your 2025-26 refund to refunds you received in 2020-21 or 2021-22, the LMITO explains much of the difference. It does not exist in 2025-26 and will not return.

7. Stage 3 Tax Cuts Reduced Your Overpayment

The 2024-25 second bracket rate dropped from 19% to 16%, and this continues in 2025-26. This means your employer is withholding less tax from your wages throughout the year. A smaller withholding rate means you are overpaying less during the year, so your year-end refund will typically be smaller. This is not a problem; it is the intended outcome of the tax cut. You received the benefit via larger pay packets, not a large refund.

How to Track Your Tax Refund Status

The easiest way to check where your refund is: log into myGov and open the ATO section. Under ‘Manage’, select ‘Tax returns’ to see the status of your current lodgment. Statuses include: ‘In progress’ (processing), ‘Delayed’ (review required), and ‘Issued’ (payment on the way).

Alternatively, download the ATO app, which provides the same information as the myGov portal and sends push notifications when your status changes. If your return has been issued but the money has not arrived in your bank, check the bank account details registered in myGov to confirm they are correct.

The $1,000 Standard Deduction: What You Need to Know

For the 2025-26 return you are preparing now, the standard deduction does not exist. Work-related expenses require: actual expenditure; the expense to be directly work-related; and written evidence for any single expense over $300 or for total work-related expenses over $300. From your 2026-27 return, if your actual work deductions are less than $1,000, you can use the standard deduction without any records. If they exceed $1,000, you claim the higher actual amount.

How The Kalculators Can Help Maximise Your Refund

Our registered tax agents work with workers, investors, small business owners, and property investors to claim every deduction, offset, and entitlement they are legally owed. We do not guess, estimate, or pad claims. We identify what you have actually spent, find deductions you may not know you are entitled to, and lodge your return with the ATO through the secure agent portal.

If you have already lodged and believe you may have under-claimed, our second look tax assessment service reviews your return and lodges an amendment. If the ATO owes you more, we get it back. If your return was lodged online in early July before pre-fill data was complete, an amendment may recover additional amounts that the ATO data loaded after you lodged.

Lodge through us and access the extended deadline (approximately 15 May 2027 instead of 2 November 2026). Call (08) 7480 2593, Monday to Friday, 9:00 AM to 6:00 PM. Offices at 182 Salisbury Highway, Salisbury; 315 Prospect Road, Blair Athol; and 280 Main South Road, Morphett Vale. Online returns are available for Murray Bridge, Woodville, Melrose Park, Port Augusta, Prospect, and Brighton.