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Accountants, start your calculators – tax time 2025 is here. It might not be as exciting as Christmas, but it’s still a major date on the calendar. It’s a chance to close the books on one financial year, hit reset on our health insurance extras and (fingers crossed) score a tax refund. But while we’re always happy to have extra cash in our pockets, how exactly do we get the most out of our tax return in 2025?
To help us answer some of the most common tax time questions, we chatted with Dr Mark Bowler-Smith, Associate Professor at Deakin Law School and an academic with more than 20 years tax law and policy research.
When June 30 rolls around each year, it’s hard to miss all the ads talking about the end of the financial year (EOFY), deductible expenses and tax returns. But what exactly is a tax return, anyway?
‘A tax return tells the Australian Taxation Office (ATO) how much you earned and spent on eligible deductions during the financial year,’ says Bowler-Smith. That’s different from a tax refund, which is the amount of money you might get back from the ATO if you paid too much tax relative to your deductions.’
Tax returns can be slightly different for everyone. As Bowler-Smith explains, it really depends on your tax bracket and what the rules are for the particular financial year.
‘From tax return 2025 onwards, the government’s cost‑of‑living cuts apply, reducing the 19% bracket ($18,201–$45,000) to 16% and the 32.5% bracket ($45,001–$120,000) to 30%, while lifting the 37% and 45% thresholds to $135,000 and $190,000, respectively,’ he says.
‘These changes mean many taxpayers will get a bigger refund – provided their deductions and offsets are in order.’
June 30 marks the end of the financial year and from July 1, we can all start our 2025 tax returns in Australia. But hold on a second – just because we can file our tax return on July 1, it doesn’t mean we should.
‘File as soon as your income statement is ready, but never before,’ says Dr Bowler-Smith. ‘Lodging early with missing bank interest or private‑health data risks an ATO adjustment that can shrink or delay your refund.’
An income statement shows information like your earnings, withheld tax and superannuation. Most income statements will be marked as ‘tax-ready’ by late July, which is why Bowler-Smith recommends holding off on your tax return.
If you know how to do your 2025 tax return yourself, you’ll have until midnight on October 31. Registered tax agents get even more time. Better to take your time and get your house in order rather than rush to hit that July 1 tax return date.
From hospitals and health care to roads, trains and schools, our taxes fund much of what keeps Australia running. That being said, wouldn’t it be nice to get a little bit of our contribution back when we submit our 2025 tax return?
When you hit submit, you might get a bill instead of a refund. How could this happen? Why do I owe money on my tax return, instead of getting a refund? According to Bowler-Smith, there are a few reasons you might end up owing the tax man money on your 2025 tax return:
Reckon you know your tax brackets from your franking credits? If you’re good at managing your money, you could join the more than 6 million Australians who choose to file their own tax return.
The Australian government uses a system called myTax that lets individuals submit their 2025 tax return themselves. That’s usually good enough for the average tax return, but Bowler-Smith still suggests calling in the help of someone who really knows their stuff.
‘Even if your return is easy, a 30‑minute chat with a professional can reveal deductions you’ve missed,’ he says. Here are some options for tax return help:
It’s a good idea to keep your receipts for business expenses but you don’t always need to show them to the ATO. You can claim some expenses on tax without a receipt, including:
We know – waiting for your tax refund can feel like an eternity. So how long does it take to process a tax return in 2025? If you did it online or through a tax agent, it shouldn’t take more than two weeks.
Strictly speaking, the ATO aims for twelve business days – so keep an eye out, but don’t get too impatient. If you really want to make sure your tax is as speedy as possible, there are a few ways to prevent tax return delays and keep the ATO happy.
Not everyone needs to lodge a tax return in 2025. If you’re unsure, you can check the ATO’s ‘Do I need to lodge a tax return?’ tool. It’s always better to be safe than sorry!
If it turns out that you don’t need to lodge a 2025 tax return, you won’t have to do anything at all. Most of us will, though. So what happens if I don’t do my tax return, but I’m supposed to? As Bowler-Smith tells it, there are some potential penalties waiting.
‘The ATO can issue a Failure‑to‑Lodge (FTL) penalty – one penalty unit ($330 for offences after 7 Nov 2024) for every 28 days late, capped at five units ($1,650),’ he says. ‘Interest may also apply, and your refund can be offset against government debts.’
But if there are genuine issues preventing you from lodging, just reach out to the ATO. ‘They’ll usually grant a deferral and you’ll avoid the penalty clock starting,’ says Bowler-Smith.
