01-Jul-2019 • Personal Finance

Almost half (48%) of Aussie tax payers are intending to save or invest their tax refund this financial year.

ME surveyed 1,000 Australian adults to see how they plan to use their tax refund, with most respondents indicating any refund they received would be spread between several different goals.

While saving was the most popular, 34% also plan to spend on goods and services, and 32% debts such as a home loan or credit card.

Around 19% of Australian’s will be directing some of their tax refund towards non-discretionary items such as bills and necessities while 17% are planning to spend on discretionary items. 

Of the Australians intending to splash cash on discretionary items, the top wish list items include:

  • A holiday (50%)
  • Clothes and shoes (40%)
  • Eating out/entertainment (31%)

According to the Australian Tax Office, 10.7 million of the 13.8 million Aussies who lodged an income tax return received a refund worth an average of $2,571. If legislated in time, Aussies’ tax refund might be boosted this year by tax changes announced by the Federal Government in the 2019 budget.

ME’s General Manager Deposits, John Powell, said the findings suggest many Australian’s are using their tax back as an opportunity to build up a savings buffer and improve their financial position.

“If used wisely, a tax refund can be a bonus ‘boost’ to your overall financial position,” said Powell.

Powell outlines four top tips to put your tax back to good use.

Reduce debt stress

“Injecting your tax refund into your debt is a great strategy.  It can help you get in control of your repayments and reduce the ongoing costs in your monthly budget.

“If your debt is spread around, start with the debt that has the highest interest rate.

“Every bit also counts when it comes to your home loan. An extra lump sum here and there into your home loan can shave years off the term and save you a load of interest in the long-run.

Save it

“If you plan to save your tax refund, putting the funds in a separate account to just your transaction account can help you avoid the temptation to spend.

“Securing your savings away into an interest paying savings account or term-deposit can help you build savings for a goal or a rainy day.

Spend it on someone in need

“If you’re in a position to spend your tax return, consider spending it on someone in need. A little can go a long way and this type of ‘pay it forward’ spending can have positive benefits for both the giver and receiver,” said Powell.

Treat yo’ self

“If you don’t have any debt, then don’t feel guilty about treating yourself (within reason).

“Most Aussies don’t factor their refund into their household budget, so if you’re expecting a little bit of tax back, a date night or some new shoes can be a nice way to reward yourself if you’ve gone without throughout the year.


Editor notes: ME’s Tax Back survey was conducted with 1,000 Australian adults in May 2019 via insights provider Pure Profile. Respondents were asked to choose ‘all that apply’ when it comes to spending their tax-back, hence why percentages when added up exceed 100%.

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