A news story has gone viral among Australian women, after they discovered that they may have to pay $17,000 to the Australian Taxation Office (ATO), which reveals why some employees who only work one job may end up paying money.
Alice, from Perth, took to TikTok to share how much the Tax Office estimated she would have to pay once she filed her tax return.
“I’m just a 23-year-old teenage girl. Please don’t do this to me,” she wrote on social media, and the video has been viewed more than 170,000 times.
“Damn you HECS debt,” she said.
This received an immediate response from his Australian colleagues, most of whom were somewhat intimidated by the huge sum.
“I cry for you,” one of them sympathized.
“I thought my case was bad and I had to pay $8,000,” wrote another.
“How does this happen?” asked another.
Alice told news.com.au she ended up paying this amount in tax not because she worked multiple jobs or ran her own business but because she was a healthcare worker and chose a salary package.
“I ended up paying taxes as a pay packet, so a lot of it is fringe benefit that is heavily taxed,” she said.
Salary pooling is an option for healthcare workers. Basically, you can agree with your employer to pay you a lower salary and then pay you a benefit of the same value.
Alice thought she might have to pay some taxes eventually, but she didn’t imagine it would be $17,000.
“I didn’t expect it to be this big, but I can manage it and save the money until it’s due in November,” she said.
Alice earns $90,000 a year and works full time. She said that as an individual she “pays a lot of taxes” and can’t “claim as much as corporations can.”
“I was surprised at how much debt I expected, as I thought it would be $10,000 max. I learned my lesson last year, but this is more than I expected,” she said.
The young worker also doesn’t understand how she ended up owing the tax department so much money.
“People say you shouldn’t get a salary package if you have HECS, but I think I’ll do it anyway because at least I’m paying off my HECS faster,” she admitted.
financial expert Graham Cook Ms. Chen said her bill was due to the way the payroll package worked.
“Because salary package benefits are considered marginal benefits, over-utilising your salary package could push you to a higher repayment threshold, and a higher HECS deduction,” Mr Cook said.
“While a salary package often offers financial benefits, it is important to understand the potential tax implications, particularly in relation to HECS.”
Mr Cook stressed that seeking financial advice is crucial if you end up with an unexpected tax bill.
“If you find yourself in this situation, consult a tax professional. A tax accountant can review your financial situation, calculate the correct fringe benefits tax, and identify any errors or overpayments,” he advised.
“You can also look at your agreement – examining the details of your salary package agreement to help determine if benefits have been valued and taxed correctly.”
