Tax Refund or Tax Bill? How To Know Before Lodgement

Not sure whether you’ll receive a tax refund or owe money this year?
Using an ATO tax calculator for 2026 helps you estimate your position before lodging — so there are no surprises.

This guide explains how to calculate your tax step-by-step and plan ahead with confidence.

Why Use a Tax Calculator?

• Estimate your refund or tax bill early
• Avoid unexpected liabilities
• Plan your cash flow better
• Ensure deductions are correctly included

The accuracy depends on the data you enter

How To Estimate Your Tax (2026)

1 Gather Your Documents

Before calculating, collect:

• Income statements (salary, wages, PAYG)
• Bank interest records
• Investment or rental income details
• Business/side income records
• Deduction receipts (WFH, car, tools, etc.)

2 Calculate Your Taxable Income

Formula:
Gross Income – Deductions = Taxable Income

This is the amount the ATO uses to calculate tax

3 Apply 2025–26 Tax Rates

Australia uses a marginal tax system, meaning different portions of income are taxed at different rates.

Always apply tax rates to your taxable income, not gross income

4 Add Medicare Levy & Adjust

Add 2% Medicare levy
Subtract any eligible tax offsets

5 Compare With PAYG Tax

Formula:
PAYG Withheld – Total Tax Payable = Result

Positive = Refund
Negative = Tax Bill

Taxable Income vs Gross Income

Gross Income = Total earnings
Taxable Income = After deductions

Many people overestimate tax because they don’t subtract deductions

Deductions vs Tax Offsets

Deductions reduce taxable income
Offsets reduce tax payable directly

• Example:
• $100 deduction ≠ $100 saving
• $100 offset = $100 saving

Real Example (Simplified)

Income: $70,000
Deductions: $2,500

Taxable Income: $67,500

After tax + Medicare:
Estimated tax ≈ $13,700

If PAYG withheld = $14,000
Estimated refund ≈ $300

Common Mistakes

• Forgetting extra income (interest, side hustle)
• Using gross income instead of taxable income
• Ignoring Medicare levy
• Missing deductions
• Confusing offsets with deductions

These lead to incorrect estimates

Smart Tips

• Track deductions throughout the year
• Keep proper records (ATO requirement)
• Review your tax position before lodgement
• Use professional advice for accuracy

Supertax Can Help

An ATO tax calculator gives an estimate —
But expert review ensures accuracy and compliance.

Contact Supertax

https://supertax.com.au/

• Suite 1, 7 Bridge St, Werribee VIC 3030, Australia
• (03) 7074 8818
• info@supertax.com.au

Plan ahead. Stay compliant. Avoid tax surprises.

This article contains general information only and does not take your personal circumstances into account. Tax and superannuation rules change, and some measures discussed may be subject to legislation. Speak with a registered tax agent before acting.