How would you use your tax returns?
According to new research from Finder, 1,077 respondents revealed a worrying 1 in 8 Australians (12%) – equivalent to 2.4 million people – admit this year’s tax refund is ‘critical’ to their financial health.
Almost 1 in 4 (23%) say cash injection at the end of the financial year is ‘very important’ to their budgets.
Millions of Australians are waiting to lodge their tax returns
The research shows 1 in 7 Australians (15%) – equivalent to 3 million people – will withdraw their refund to pay for household bills, while 5% will put it towards their mortgage.
According to Rebecca Pike, a money expert at Finder, the cost of living crisis has triggered an over-reliance on tax returns.
She further explained:
“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.
If you’re waiting for your tax return to bail you out, you are likely living beyond your means.”
The research data also reveals that more than 1 in 3 (36%) Australians – around 7.3 million people – plan to put their tax returns into savings.
Based on the average refund being $2,900, Finder estimates that a staggering $20.8 billion would be put into savings this tax season.
Furthermore, the study shows 4% will use their tax return to pay off existing credit card debt.
Few Aussies are in the mood to splurge with just 5% planning a holiday with the money, and 3% who plan to go shopping.
Meanwhile, one in five (19%) Aussies don’t expect to get a tax refund this year.
Consider investing your tax refund
Pike said investing your tax refund could create passive income.
She commented:
“If you get a tax refund this year, it can be tempting to spend it all.
But if you invest it strategically, you can generate passive income for years to come.
Put it in a high-yield savings account or jumpstart your investing journey to build wealth.”
She also urged employees to claim all eligible deductions:
“Make sure you claim working from home expenses if you’ve worked any hours from home.”
Top tips ahead of tax time
1. Consider an accountant
If your finances are a little complex or you’re unsure whether you can claim something, consider working with an accountant to ensure your return is lodged correctly.
2. Lodge on time, but not too early
If you plan on doing your own tax return, you’ll need to lodge it before 31 October.
On the flip side, lodging your return too early might mean missing important information and lodging an incomplete return.
3. Hold on to your receipts
You need to keep a clear financial record of anything you want to claim.
Without this, there’s no proof of purchase and you might not be able to get your money back.
