Tax time: H&R Block offering $1000 upfront payment on returns as consumer advocates raise concerns

Taxpayers can get an upfront payment of up to $1000 as soon as they lodge their return with accounting firm H&R Block.

However, consumer advocates have sounded the alarm over the initiative, saying it could unexpectedly force people into debt.

H&R Block says 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.

Participants are encouraged to book an in-person appointment with the firm when a “consultant goes through the process of preparing that tax return”, company spokesman Arvind Vasudevan told 7NEWS.

He said the “first and most important thing” was determining if a client had an estimated refund.

“The second is they have to be willing to take up our fee from the refund service,” Vasudevan said.

“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 $1000, depending on what their refund size is.”

The fee is 5 per cent of the advance payment, or a maximum of $50.

The payment is transferred by Beforepay, which has partnered with H&R, through its app, according to Vasudevan.

“It’s all completed within a few minutes before walking out of there,” he said.

Rose Bruce-Smith from the Consumer Action Law Centre believes the initiative may lead to people getting “into more debt against money that they think might be coming in”, especially if “you’re one of the unlucky ones” who “end(s) up not getting what you expect to get”.

“It’s encouraging people to borrow money against what they may be entitled to in the future,” she told 7NEWS.

“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.”

Vasudevan is confident the company would not leave people in that situation.

“We try to establish a criteria of at least an estimated refund, which from our perspective should cover any amendments the ATO should make to the return afterwards,” he said.

“We’d like to think that sort of estimate is fairly accurate from that perspective, over years of doing tax for millions of Aussies across the years and we’ve found that actually works pretty well.”

But he conceded people may find themselves out of pocket as a result of the initiative, which was piloted last year before being rolled out in 2024.

“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.

“We understand clients might have challenges making those payments, because they may not have the money.

“But we (will) work closely with them to either help them out or put them on a payment plan and work through a process by which we can collect that money.”