Think smart on tax refund

While many Australians will receive $1080, don’t be tempted to fritter away your tax refund, writes

ONE in three Australians plans on using money back from tax returns to pay for essential items such as food and rent, alarming new figures show.

Millions of middle and lowincome earners will receive a tax cash boost of up to $1080 when they file their return, thanks to Prime Minister Scott Morrison’s tax cuts.

New research from accounting software firm MYOB found that 25 per cent plan to use their money wisely and invest it.

About 16 per cent will spend it on a holiday, while one in six people say they usually don’t get any money back.

MYOB general manager of partners Blake Collins said for most people, the temptation to splash out once they received their return was hard to resist.

“What we are likely to see is an uptick in the sale of goods such as technology in the next quarter,” he said.

“Many Australians are also using their tax return to catch

up on essential purchases like groceries and bills.

“If you don’t need to do that it’s a great opportunity to step back and have a look at what you can do with the money.”

While a majority of Australians do receive cash back at tax time, they dread filing their return. Westpac analysis found one in three people would rather do household chores instead.

Westpac’s retail and

premium bank general manager, Jane Watts, said getting a tax refund was the prime opportunity to smash down some debt.

“While it can be tempting to splurge any refunded tax money on a treat or something you’ve had your eye on, consider putting it towards bills or existing debts,” Ms Watts said.

“With the average tax return for Australians coming in at $2571, putting this amount towards any outstanding repayments like a loan or credit card could help you save in the longer term by paying this debt down sooner.”

Ms Watts said, with home loan interest rates reaching historic lows, it was also a great opportunity for borrowers to pay a chunk off their mortgage.

“Or first-home buyers can put the additional funds towards their deposit, with great rates and special offers available for Australians looking to purchase their first home to live in,” she said.

Mr Collins said being organised and not filing in a rush paid off.

“Maximise your refund by identifying all those expenses you can claim,” he said.

“Typical claims can include laundry – if you are required to wear a uniform to work – education expenses, luggage – if you travel for work – and sunglasses – if you work outdoors.”