Wis­dom for wind­fall

Many will soon re­ceive a tax re­fund, but us­ing it clev­erly can save or make more money, writes

Townsville Bulletin - - NEWS -

MIL­LIONS of Aus­tralians who are lucky enough to re­ceive a small wind­fall this tax time will choose to save it in­stead of go­ing on a spend­ing splurge, re­search has re­vealed.

Aus­tralian Tax­a­tion Of­fice sta­tis­tics show the av­er­age tax re­fund from the 2014- 15 fi­nan­cial year was $ 2564, and out of 13.2 mil­lion tax­pay­ers, 10.3 mil­lion re­ceived a re­fund.

With the 2016- 17 fi­nan­cial year now be­hind us, many peo­ple will be lodg­ing their re­turns and wait­ing anx­iously to see if they get money back.

New re­search from lender ME found 52 per cent of Aus­tralians ex­pect to save this year’s tax re­fund, while 24 per cent plan to pay down debts other than their home loan.

About 18 per cent are opt­ing to tip the money into their mort­gage, while 13 per cent said they would be spend­ing it on a prod­uct or ser­vice.

ME’s head of de­posits and trans­ac­tional bank­ing, Nic Emery, said any wind­fall re­ceived should be a good op­por­tu­nity to help to get rid of debts.

So­phie Elsworth

“Start with your high­in­ter­est- rate debt, so start with any credit cards or any per­sonal loans, and then put the money into your home loan,” he said.

“That in­ter­est ( on these prod­ucts) re­ally adds up over time. Af­ter this there may be an op­por­tu­nity to main­tain as­sets, so look­ing af­ter your home, car or your health.

“It will also be a good op­por­tu­nity if you don’t have an emer­gency fund to build up one.”

In­ter­est rates on credit cards can be higher than 20 per cent, and on per­sonal loans are about 10 per cent.

Home loans re­main the cheap­est form of per­sonal debt, with many deals around 4 per cent.

AMP fi­nan­cial ad­viser An­drew Heaven urged Aus­tralians to use any tax re­fund money wisely and not in haste.

“In the first in­stance, they should be pay­ing down non- de­ductible debt and the debt that is at the high­est in­ter­est rate,” he said. “If you do have debt ow­ing on a credit card or a line of credit or a per­sonal loan debt, look at your be­hav­iours to see how you got your­self into this po­si­tion and mod­ify your be­hav­iour ac­cord­ingly.” Mr Heaven said for con­sumers with­out debt, it could be a good idea to in­vest the money in as­sets such as su­per­an­nu­a­tion, but most im­por­tantly they should avoid spend­ing it on im­pulse pur­chases.

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