A tax refund or rebate is a matter concerning the government and the taxable person only. No other person or organisation is privy to any information regarding a tax refund and no one other than the person that has been over taxed is eligible to receive the payment. That is ultimately a rule that is unbreakable.
However, the minute you cash your refund, the balance is no longer a ‘refund’ or ‘rebate’ but rather available and legitimate funds. A tax rebate is only ever a ‘rebate’ until the cheque has been cashed. Then it is simply money in your account, and legitimate funds to which any creditor would be due payment where a credit agreement is in place.
So, a payday lender cannot take your tax refund. They cannot approach inland revenue or your government tax and revenue department directly in order to receive any such funds. This is just simply not possible or legal. No one can. But what they can do however, is chase you for payment where you are late in doing so, and if the tax refund has been cashed into your account, these funds are legitimate for you to be making payment.
So, while a lender cannot approach the tax office directly to divert any such refund, they can still approach you for payment once any such funds have been paid to you and cashed by you.
Related questions to this one: Can payday loan companies take my tax return?
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