The positive thing about tax time, is that the majority of taxpayers – 82 per cent according to the ATO – are likely to get a refund. For some, the refund may be huge as the average tax refund for the 2017/18 financial year was $2,574.
While not a life changing amount, a four-figure refund can be a major help. Here are a few tips on how to make the most of your tax refund this year.
Bills, Bills, Bills
The battle to keep on top of bills seems never ending, but a solid tax refund can help ease the burden by putting it towards paying some of the major bills. Whether its council rates, water rates, car registration and the like, your tax refund can come in handy when it comes to paying those pesky, but necessary bills that seem to sneak up on most people.
Pay Off Debts
The first thing likely to come onto people’s minds will be credit cards, and a tax refund will certainly help people if they put their refund to any credit card debt they may have. However, using your tax refund to help pay off other debts may also help. This includes putting a few extra payments on a mortgage, which will lower interest payments and pay the house off quicker than the original loan term.
In some situations, the best thing to do can often be nothing, and this could very well be the case when it comes to your tax refund. Keeping the money in your bank account for a ‘rainy day’ can be a major financial benefit, and knowing that you have a few spare thousand dollars to pay those unexpected expenses provides great comfort and peace of mind.
Although it is important to take advantage of a major tax refund and pay some of those lingering or upcoming financial obligations, it is also important to use some of the money to treat yourself. After all, tax money is money you’ve likely earned from working, so there’s absolutely nothing wrong with taking a small chunk of your refund and spending it on a good time with family, friends or even by yourself.
While the four aforementioned ways to spend your tax refund are significant and helpful, they are certainly not the only ways you can use it. Also remember that it may be beneficial to your individual circumstance to not put all your eggs in one basket when it comes to spending your tax refund. Instead, it may be better to spend some on debts, some on treating yourself and keeping the rest in a bank account.
This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs.
GTC Financial Services Pty Ltd ABN 69 596 897 575 is a Corporate Authorised Representative of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523