Can payday loans take your tax return?

Can a payday lender approach your government’s tax department to reclaim any money due from your tax return? No

Can the balance be added to any tax due on your tax return? No

Government tax is a completely separate entity to retail or commercial debt. They have no relationship whatsoever, and obligatory payments for tax are not the same as obligatory payments for commercial debt. They are not even closely related and no lender has the right to chase the recovery of any payments from your tax or tax return.

However, where they can’t approach your tax return, or claim directly from any applicable rebate, they are still ultimately due repayment. If a rebate is granted, the tax office will usually issue a cheque for the balance overpaid. As soon as you cash this, it is no longer a rebate, it is available capital in your account. This is money that a lender can approach you for with regards repayment and they would be considered available funds legally. The curtain of protection under the banner of ‘tax rebate’ or ‘return’ is only valid until such time as any funds have been paid directly to you.

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.

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