How Much Tax Will I Get Back?

Refund vs tax return

A tax return is the form you lodge. A tax refund is the result you get only if you have already paid more tax during the year than your final liability.

That final liability is broader than income tax alone — and the refund calculation always follows the same four steps:

1
Add up assessable income
Salary, interest, dividends, capital gains, and any other taxable income for the year.
2
Subtract deductions
Work-related expenses and other allowable deductions reduce your taxable income. From 2026–2027, an automatic $1,000 standard work deduction also applies — your work-related total is the higher of what you claim and that amount, never the two added together.
3
Work out the final liability
Income tax on the brackets, reduced by offsets like LITO — then the Medicare levy, any MLS, and HELP repayments are added on top, which those offsets cannot reduce.
4
Compare with PAYG withheld
Withheld more than the liability and the difference comes back as a refund; withheld less and you owe the gap.

Worked example

On an $85,000 salary with $18,500 withheld and no HECS debt, the estimated refund in our 2026–2027 example is about $1,100 — a figure that already includes the automatic $1,000 standard work deduction.

What usually creates a refund

Refunds come from three places: more PAYG withheld than your final bill, valid deductions and offsets, and conservative payroll withholding on bonuses or irregular pay.

More PAYG withheld than the final bill

This is the basic reason any refund exists. The ATO compares your total liability with the tax already withheld through payroll or instalments.

Valid deductions and offsets

Deductions reduce taxable income. Offsets and credits reduce the tax after it is calculated. In our $80,000 salary example, adding $2,500 of deductions improves the outcome by about $480 compared with claiming nothing — smaller than the marginal rate alone suggests, because the first $1,000 is already covered by the automatic standard work deduction.

Conservative payroll withholding

Bonuses, irregular payments, and mid-year changes can lead to higher withholding in some pay runs than your eventual annual outcome. If that sounds familiar, the bonus tax guide explains the most common version of it.

Why you might still owe

Two frequent surprise bills are the Medicare Levy Surcharge (no hospital cover above the threshold) and HELP repayments that payroll withholding didn't allow for:

MLS without hospital cover

If your income for MLS purposes ends up above the MLS threshold and you do not hold appropriate private hospital cover, you can owe more at tax time. PAYG withholding schedules never include the Medicare Levy Surcharge, so nothing is set aside for it during the year — in our $110,000 example the whole surcharge lands at assessment, leaving an estimated bill of about $750.

HELP repayments

HELP is another common reason for an unexpected bill. In our $95,000 example, using withholding that did not allow for a study loan leaves an estimated amount owing of about $3,315. The HECS/HELP guide covers the repayment rules in detail, and the HECS repayment calculator estimates the compulsory repayment before you lodge.

Other common causes are multiple jobs, extra investment income, reportable fringe benefits, salary packaging effects, and claiming less PAYG during the year than your final profile requires.

If the gap is coming from Medicare settings or private cover, the Medicare Levy Surcharge guide is the best next read.

When refunds are paid

Many electronically lodged returns are processed quickly, but it is not instant and it is not identical for everyone. Pre-fill timing, private health reconciliation, data-matching, and manual review can all slow the assessment down.

A refund is also not always paid out in full: the ATO applies any credit against outstanding tax debts first — including debts on hold — and can direct part of it to other agencies, such as a Services Australia debt, before the balance reaches your bank account.

The practical takeaway is to treat the refund as an estimate until the notice of assessment arrives, especially if your return includes HECS, franking credits, private health adjustments, or income from more than one source.

Source: ATO — Check the progress of your tax return.

What the calculator can and cannot do

The tax return calculator is useful for decision-making: it helps you test whether deductions, private health settings, HECS, or PAYG withholding assumptions are moving you toward a refund or a bill.

It is not a promise of your final assessment. The ATO can still process data that is not in your estimate yet, and private health insurance rebate adjustments or late income reporting can change the final result.

Before lodging, it is worth checking the tax return checklist so the estimate and the final return are based on the same records.

Frequently asked questions

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How much tax will I get back?

Your refund is the difference between the tax withheld from your pay and your final liability — there is no standard amount. As a worked example, a $85,000 salary with $18,500 withheld and no study loan produces an estimated refund of about $1,100 for 2026-27 — a figure that already includes the automatic $1,000 standard work deduction. Run your own numbers in the tax return calculator before lodging.

How is a tax refund calculated?

The ATO adds up your assessable income, subtracts deductions to get taxable income, calculates income tax on that, applies offsets like LITO against the income tax only, then adds the Medicare levy, any MLS and any compulsory HELP repayment — none of which LITO can reduce. That final liability is compared with the PAYG tax already withheld: withheld more than you owe and the difference is refunded; withheld less and you get a bill.

Does everyone get a tax refund?

No. A refund only happens if more tax was paid during the year than your final liability after income tax, Medicare, HELP, offsets, and surcharges are worked out.

Why would I still owe tax if my employer withheld PAYG?

Common reasons include having multiple jobs, not enough withholding for a study loan, no eligible private hospital cover when MLS applies, extra taxable income, or a change in your income through the year.

Do deductions guarantee a refund?

No. Deductions reduce taxable income, so they can improve the outcome, but they do not automatically create a refund if insufficient tax was withheld in the first place.

How quickly does the ATO process a refund?

Many electronically lodged returns are processed quickly, but timing still depends on pre-fill completion, risk checks, and whether the return needs manual review.