A popular tax agent is offering people an upfront $1,000 ‘advance’ as soon as they lodge their return this year, but consumer groups fear it could force people into debt.
Long-standing tax consultant H&R Block said it’s willing to give clients a partial ‘advance on their refund’ without having to wait for the Australian Taxation Office to process their return.
Company spokesman Arvind Vasudevan said the process begins when participants book an in-person appointment with the firm.
He said the most important part of the process was determining if a client had an estimated refund.
They also had to be willing to pay the agent’s fee, which is five per cent of the advance payment or a maximum of $50.
A popular accounting firm is offering people an upfront $1,000 ‘advance’ as soon as they lodge their tax return, but consumer groups fear it could force people into debt
‘Once they acknowledge they’re ready to take up that service, we then establish if they meet the criteria for a refund advance of up to $1,000, depending on what their refund size is,’ he told 7NEWS.
Mr Vasudevan said the payment is then transferred within minutes through the Beforepay app – a H&R Block partner.
But not everyone is happy about the initiative.
Rose Bruce-Smith from the Consumer Action Law Centre believes the initiative may lead to people getting into more debt.
She warned that it may be problematic for ‘the unlucky ones’ who end up receiving less than they expected.
‘It’s encouraging people to borrow money against what they may be entitled to in the future,’ she said.
‘In this cost-of-living crisis, we’re seeing people take out loans whether that’s through buy-now, pay-later or wage advance very frequently, getting into massive amounts of debt that they can’t handle and ending up in a worse situation than if they had reached out to traditional hardship support.’
Mr Vasudevan initially said the company would not leave people in that situation, but he conceded people may find themselves out of pocket as a result of the initiative once the return is processed by the ATO.
H&R Block said it’s willing to give clients a partial ‘advance on their refund’ without having to wait for the Australian Taxation Office to process the return
He said they have tried to establish criteria there there is at least an estimated refund which should cover any amendments the ATO later makes to the return.
‘We (will) go to the clients and advise them of what the change has been and why the ATO has made the change, and we request them to make the payment to us,’ he said.
He said the firm understands that clients may have trouble making those payments, and will work closely with them to either help them out or put them on a payment plan.
The initiative was piloted last year before being rolled out in 2024.