Set for $2.9K tax payment
Millions of Aussies waiting to lodge returns for expenses
Millions of Australians struggling with the rising cost of living are waiting to lodge their tax returns so they can use the cash to pay for bills and other essential expenses, new research has found.
The survey of more than 1000 respondents by comparison website Finder found nearly one in four (23 per cent) said the end of financial year cash injection was “very important” to their budgets, with a worrying 12 per cent saying it was “critical” to their financial health.
According to the research, one in seven (15 per cent) — equivalent to three million people — said they would be using the refund to pay for household bills, while five per cent will be putting it towards their mortgage.
Finder money expert Rebecca Pike said the cost-of-living crisis had caused an overreliance on tax returns.
“There’s a cash flow crisis and many are counting on their tax return to address everyday expenses and get them out of a tight spot,” she said in a statement. “If you’re waiting for your tax return to bail you out, you are likely living beyond your means.”
More than one third (36 per cent) of respondents plan to put their refund into savings.
With the average tax refund of $2900, that could equate to $20.8 billion being put into savings this tax season, according to Finder.
“If you get a tax refund this year, it can be tempting to spend it all,” Ms Pike said.
“But if you invest it strategically, you can generate passive income for years to come. Put it in a high-yield savings account or jump-start your investing journey to build wealth.”
Finder’s survey found four per cent would use their tax return to pay off credit card debt, while five per cent plan to use it on a holiday and just three per cent said they would go shopping.
“We know many people are doing it tough this year,” Australian Taxation Office (ATO) Assistant Commissioner Tim Loh said earlier this month.
“We expect fewer people will receive a refund or may receive smaller refunds than they were expecting, and more may have tax debts to manage.”
How to get the biggest refund
Tax agents say you are unlikely to get the highest return by relying on the pre-filled data from the ATO.
Though it might be the quickest way, taxpayers should know that the pre-filled information is not always the most reliable according to H&R Block’s director of tax communications Mark Chapman.
“During July in particular, many taxpayers are shocked to notice plenty of their income information doesn’t show up when they download data from the ATO,” he said.