A popular tax agent is offering people an upfront $1,000 “retainer” as soon as they file their return this year, but consumer groups fear this could force people into debt.
Long-standing tax consultant H&R Block said it is willing to offer clients a partial “refund advance” without having to wait for the Australian Tax Office to process their return.
Company spokesperson Arvind Vasudevan said the process begins when participants book an in-person appointment with the company.
He said the most important part of the process was determining whether a customer had an estimated refund.
They also had to be willing to pay the agent’s fee, which is five percent of the upfront payment or a maximum of $50.
A popular accounting firm is offering people an upfront $1,000 “retainer” as soon as they file their tax return, but consumer groups fear this could force people into debt.
“Once they recognize that they are ready to accept that service, we determine if they meet the criteria for a refund advance of up to $1,000, depending on what the amount of their refund is,” he said. 7NEWS.
Vasudevan said the payment is transferred within minutes through the Beforepay app, a partner of H&R Block.
But not everyone is happy with the initiative.
Rose Bruce-Smith of the Consumer Action Law Center believes the initiative could lead people into more debt.
He warned that this can be problematic for “the unlucky ones” who end up getting less than they expected.
“It’s encouraging people to borrow money against what they may be entitled to in the future,” he said.
“In this cost of living crisis, we are seeing people taking out loans very frequently, whether through buy now, pay later or salary advance, taking on huge amounts of debt that they cannot handle and ending up worse off than if they had resorted to traditional support in case of difficulties.’
Vasudevan initially said the company would not leave people in that situation, but admitted people could be left out of money as a result of the initiative once the refund is processed by the ATO.
H&R Block said it is willing to give customers a partial “refund advance” without having to wait for the Australian Tax Office to process the refund.
He said they have tried to establish criteria so that there is at least an estimated refund that should cover any modifications the ATO subsequently makes to the return.
“We will go to customers and tell them what the change has been and why the ATO has made the change, and ask them to make 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 help them or put them on a payment plan.
The initiative was piloted last year before being rolled out in 2024.
