How to avoid tax time re­grets

More Aus­tralians are us­ing their tax re­funds to pay out­stand­ing bills and other debts, writes

Townsville Bulletin - - NEWS -

TAX time re­gret is af­fect­ing al­most three quar­ters of Aus­tralian tax­pay­ers, who are un­happy about the size of their re­fund.

New re­search has found that 71 per cent feel ei­ther dis­ap­pointed or frus­trated with their tax re­turn, and many do not use re­funds for any­thing mean­ing­ful.

Al­most half ad­mit to us­ing their re­fund to pay bills or other debts, ac­cord­ing to the re­search com­mis­sioned by mo­bile phone ser­vice provider amaysim.

“When the end of fi­nan­cial year rolls around and peo­ple have worked hard, they feel they de­serve a de­cent tax re­turn — that’s where a mis­match of ex­pec­ta­tions and re­al­ity can oc­cur,” said amaysim’s mo­bile com­mer­cial di­rec­tor, Maik Ret­zlaff.

Lat­est Aus­tralian Tax­a­tion Of­fice data shows that more than 10 mil­lion Aus­tralians re­ceive a tax re­fund, av­er­ag­ing $ 2564. The me­dian tax re­fund re­ceived is $ 1391.

Mr Ret­zlaff said tax re­mained a mys­tery for many peo­ple, and they of­ten know­ingly wasted their re­funds on bills that could be avoided with bet­ter plan­ning.

“No one feels com­fort­able ow­ing money, so they choose to pay off their bills rather than spend­ing their tax re­turn on treat­ing them­selves,” he said.

The re­search found peo­ple be­lieved they could save up to $ 2200 on house­hold ex­penses such as util­i­ties, phone bills and in­ter­net providers, with 71 per cent ad­mit­ting they wasted money on util­ity bills.

“Look at your bills and con­tracts and com­pare what you pay to other of­fers out there. The in­ter­net of­fers plenty of user- friendly com­par­i­son web­sites,” Mr Ret­zlaff said.

“Switch­ing your mo­bile phone provider is one of the quick­est and eas­i­est ways to start sav­ing money.”

Peo­ple’s Choice Credit Union spokesman Stu­art Sy­mons said tax re­funds could be used con­struc­tively to save money over the long term rather than putting out bill spot fires.

“Every dol­lar you put into your mort­gage will save you in­ter­est over the life of the loan. Even a mi­nor ad­di­tional re­pay­ment can make a dif­fer­ence over a 30- year term,” he said.

Tax re­funds could also be put into bonus saver or term in­vest­ment ac­counts to grow over time, earn­ing money on SWITCHED ON: Stephanie Lund and Paul Kor­nel moved in to­gether this year and have dis­agreed about leav­ing the lights and TV on. your money, Mr Sy­mons said.

How­ever, it usu­ally makes more fi­nan­cial sense to pay down high- in­ter­est debts be­fore in­ject­ing money into low­er­in­ter­est sav­ings ac­counts.

Mr Sy­mons said a tax re­fund could be­come a wel­come Christ­mas sav­ings fund to re­duce fi­nan­cial stress dur­ing the fes­tive sea­son, now just four months away.

“You’ll barely miss your tax re­fund and by putting away a lit­tle ex­tra each month, which you can set up to be au­to­mat­i­cally deb­ited on pay­day, you’ll set your­self up for a debt- free Christ­mas,” he said.

Pic­ture: PETER WAL­LIS

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