H&R Block is offering people an instant $1,000 ‘advance’ on their tax return this year – but consumer groups have issued a stern warning about the practice
A popular tax agent is offering people a $1,000 advance payment once they file their returns this year, but consumer groups fear it could leave people in debt.
Long-standing tax advisor H&R Block said it is willing to give clients a partial “advance on their refund” without having to wait for the Australian Taxation Office to process their returns.
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 received an estimated refund.
They also had to be willing to pay the broker’s fee, which is five percent of the deposit or a maximum of $50.
A popular accounting firm is offering people a $1,000 advance when they file their taxes, but consumer groups fear it could leave people in debt.
“Once they recognize that they are ready to use that service, we will determine if they meet the criteria for an advance reimbursement of up to $1,000, depending on the size of their reimbursement,” he shared. 7NEWS.
Mr Vasudevan said the payment is then transferred within minutes via the Beforepay app – an H&R Block partner.
But not everyone is happy with the initiative.
Rose Bruce-Smith of the Consumer Action Law Center believes the initiative could lead to people falling into even more debt.
She warned that this could be problematic for “the unlucky,” who may end up receiving less than they expected.
“It encourages people to borrow money against what they may be entitled to in the future,” she said.
‘In this cost of living crisis we are seeing people very often taking out loans, whether that be through buy-now, pay-later or wage advances, taking on huge amounts of debt that they cannot handle and ultimately ending up in debt that they can not handle. a worse situation than if they had sought traditional hardship relief.”
Mr Vasudevan initially said the company would not leave people in that situation, but he admitted people may be left out of pocket as a result of the initiative once the return is processed by the ATO.
H&R Block said it is willing to give customers a partial “advance on their refund” without having to wait for the Australian Taxation Office to process returns
He said they have tried to establish criteria: there is at least an estimated refund that should cover any changes the ATO makes to the return later.
“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 the payment to us,” he said.
He said the company understands that customers may have difficulty making these payments and will work closely with them to assist them or set up a payment plan for them.
The initiative was tested last year before being rolled out in 2024.
