Estimated reading time: 7 minutes
At tax time you often see ads for a “same day tax refund” or “instant tax refund”. The promise of cash today sounds appealing, but the reality is far less attractive.
The truth is, a “same day tax refund” is not really what the name suggests.
Key Takeaways
- An “instant” or “same day” tax refund is not a real tax refund. It’s a short-term, high-interest loan.
- Fees can exceed 20% of your tax refund.
- If the ATO delays or reduces your refund, you still owe the full loan amount.
- Most Australians receive their ATO refund within 6 – 10 business days.
- A reputable tax agent (like Etax) is a far safer (and usually cheaper) alternative.
Can I Get my Tax Refund Today?
No – but most Australians only wait 6-10 business days for their ATO tax refund. If you use a tax agent, like most Australians, the agent sends the money straight into your bank account.
Instant Tax Refunds are Often a Rip-Off – Here’s Why
If you need your tax refund in a hurry, and you choose an “instant tax refund”, you could land yourself in serious financial strife. Because really,
there’s no such thing as an instant tax refund.
The Australian Taxation Office (ATO) issues tax refunds. When you sign a “same day tax refund” contract, what you’re actually signing up for is a high-interest, short-term loan, loaded with fees and late charges buried in the fine print.
Pay Close Attention to the Numbers
Instant tax refund companies can take 20% or more out of your refund, right from the start. They may also charge you a combination of fees and interest that take an even bigger chunk of your money. On top of that, their basic tax return fees are often higher than you’d pay at most reputable tax agent services.
It gets worse: if the ATO delays your refund at tax time – something entirely out of your control – you could be hit with additional interest and fees. In some cases, you could wind up paying more than your total tax refund straight to that “instant refund” tax loan agent.
If you think that’s risky, it can get even worse!
If the ATO refund is less than expected, you still owe the full loan amount, plus all the fees and interest to the tax loan agent. You must repay it immediately, or penalty fees and high interest kick in. This can spiral quickly if you can’t afford to repay immediately. If you need time to pay it back, you might discover your instant tax refund costs you more than your entire ATO tax refund.
Instant tax refund online example:
“Phillip wants a mountain bike”
Phillip is expecting a $1,400 tax refund from the ATO. The mountain bike he wants to buy is on sale now, so he wants the cash today.
Phillip decides to use a same-day tax refund service. At first, the fees don’t look too scary…
- 10% of the tax refund (a realistic example)
- $120 basic tax return fee plus a typical $30 fee for deducting the fees later. (That’s common, but it can go much higher).
Philip signs the agreement and walks away with $1,000 cash. (Note: the loan is usually quite a bit lower than your total estimated tax refund).
At this point, Phillip only factored in the $120 fee, but even if he repays on time, the minimum he will pay in fees is $290. That is a very high fee for a basic tax return, and there might be more fees coming Phillip’s way very soon…
Phillip takes his $1,000 cash, gets his mountain bike and he has not paid any fees out of pocket – yet.
Phillip hits some tax turbulence:
Later, he gets a message: The ATO withheld his $1,400 tax refund. He forgot to declare his Centrelink debt when he did his tax return (a common issue). The ATO sent Phillip’s refund straight to Centrelink, so he receives nothing.
But didn’t Phillip already get a tax refund?
Actually, he only received a loan, on the assumption he would receive a refund.
Now, Phillip owes money to the tax refund business for the loan. How much does he owe?
- $1,000 for the “instant refund” loan
- $290 in fees
- that makes the total $1,290
Phillip doesn’t have $1,290 in the bank. He can only afford to repay $100 a month. What happens now?
The fine print:
The fine print allows monthly repayments, but he must pay an additional 4% of the original loan, per month ($40) as a penalty, as well as a $12 monthly late fee for missing the original due date.
Phillip makes his $100 monthly payments. Each month, $52 gets sucked up by interest and fees. Only $48 goes toward his loan, which means Phillip’s $100 monthly payments will continue for 27 months.
By the end of it, Phillip must pay back his $1,000 loan PLUS another $1,694 in fees and interest. In total, Phillip repays $2,694 – nearly three times the amount he borrowed!
This fictional example is not a worst-case scenario. A worse case could spell financial ruin for a taxpayer. That might involve:
- a bigger loan
- a person who could only afford a much smaller repayment
- a same-day refund agent that charges even higher fees – yes, they are out there, waiting to trap people who don’t check the fine print
The verdict on same day tax refunds
It’s not worth it.
Most Australians receive their tax refund within 6–10 business days after lodging their return.
Ask yourself: “Can I wait a week or two like most Australians?”
If you need money instantly, there are safer ways to borrow. Based on our review of the fees charged by same-day-refund companies, it appears many of them are a rip-off. And they’re a rip-off that could cost you money month after month, for a long time. Even credit cards, which can have terrible fees and interest rates, might be cheaper and safer than a same day tax refund.
A good tax agent service can often save you money and boost your refund.
A normal, popular online tax agent like Etax is different to a same-day “instant tax refund” agent. The fees are reasonable, the service is professional, and there’s no chance you’ll be charged interest fees or late charges.
A same-day refund agent will, in most cases, cost you more than it’s worth. Don’t risk it all for a same-day tax refund loan.
The Safer Way to do Your Tax Return
Most Australians use a tax agent to complete their tax return. Get the confidence of knowing that qualified accountants check your return to make sure everything is correct, so you get the best outcome possible.
Lodge your return quickly, safely, and affordably at Etax.com.au.
Reasonable Tax Agent Fees
At Etax, our online tax return fees start at only $82.49. If you’d prefer your fee to be taken from your tax refund later, our fee from refund service is just $27.50 extra. You will never be charged interest at Etax.com.au – click here to learn more about low fees at Etax. And you get accountants working on your side: our tax accountants review your return to make sure that everything is correct, and that you’ve claimed every deduction you’re entitled to.
Once we lodge your return with the ATO, you can generally expect to receive your refund in about 10 days. Not only will you avoid the staggering fees of a same-day tax return service – you will likely get more money in your refund and enjoy peace of mind knowing your return was done properly
Frequently asked questions
Yes, they are legal, but they are short-term loans, not actual tax refunds.
Most Australians receive their tax refund 6-10 business days after lodging their return.
You still owe the full loan amount to the instant refund company, regardless of what the ATO pays out. If your refund is withheld entirely, for example, to cover a Centrelink debt, you must repay the loan out of your own pocket.
Yes. If you lodged through Etax, you can track your refund through your Etax account, or contact us and we’ll follow it up with the ATO for you.
Yes. A registered tax agent charges a transparent fee, can increase your refund by identifying deductions you may have missed, and will never charge you interest.
Lodge your tax return as early as possible after 1 July through a registered tax agent, and you should receive your refund within 6-10 business days. There is no legitimate way to receive your ATO refund on the same day you lodge.
