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