This is a common question, so in this post I outline a few methods (some quick, some more accurate) to calculate your tax refund.
First, a warning
Don’t rely on a particular dollar figure until the refund arrives in your bank account!
Too many people have used the methods in this post to calculate their refund and spent the money in advance. When their tax return is processed, the refund is lower than expected (or non-existent!) because of a mistake in their estimate.
Quick Estimate of the Maximum Possible Refund
As outlined in my last post how to get a tax refund, a refund arises when the tax pre-paid during the year is higher than the tax calculated on the tax return. Therefore, the maximum refund you can get is the amount of tax pre-paid throughout the year.
To find a quick estimate of the maximum possible refund, add up all of the following:
- Tax withheld from your wages/salary or bank interest during the year, plus
- Tax instalments paid during the year, plus
- Franking credits on any dividends received during the year.
The total of these figures is the maximum possible refund you can receive. There are other amounts that can increase this by a little extra, but they take longer to calculate.
In most cases, you will not get this maximum amount, but I’ve found that the calculation is useful in the past for putting an upper limit on expectations.
Calculators from the Australian Tax Office Website
There are two tax estimate calculators on the Australian Taxation Office website:
- The simple tax calculator is quicker.
- The comprehensive tax calculator was designed to be more accurate.
They are free, easy to use and anonymous.
Draft Tax Return
This final method is the most time-consuming, but potentially the most accurate.
Basically, you use your (or your tax accountant’s) tax return preparation software and draft your tax return. Most software contains a tax estimate calculator as well as error-checking, suggestions and help files.
For extra accuracy, ask your tax accountant for assistance, although there may be a cost.
Remember, use wisely: don’t rely on a particular figure until it’s in your bank account!
As with anything tax, it’s best to ask your tax accountant about your specific situation.