Smart ways to spend your tax refund

By July 17, 2020Saving
Tax return

We all love the top-up tax refunds give our bank accounts and as of July last year, the average tax return for Australians was $2381. When you receive yours this new financial year, before you jump online and start spending, think about some smarter ways you could spend this money that will benefit you long into the future. 

This content should not be considered financial advice. When deciding where the best option is to spend your tax refund, you should consult your financial service provider. They can give you access to the right information and advice based on your specific situations and needs.

Make a voluntary super contribution
To live a comfortable retirement that includes health insurance, travel and leisure activities, The Association of Super Funds Australia (ASFA) has estimated Australians would need to have a superannuation balance of $545,000 for singles or $640,000 for couples, available at retirement. The average Australian couple aged 60-65 have a joint retirement amount of approximately $427,800. Why work so hard for most of your life, only to have to budget when you get to retirement to ensure your super lasts. Be proactive and start saving more now, through voluntary super contributions. 

Invest in work-related equipment
A great thing to do with additional cash is to invest it back into your business so that it can continue to grow and generate profit. By using your tax refund to purchase work-related equipment or assets, you’ll have the best tools to work effectively into the new financial year, and you can add these to next year’s tax claim. SFE loans can help you acquire any loans you may need to top up your tax return when looking for tool, asset or equipment finance.

Pay off your debt or loans
If you feel like you’ve been putting too much money into the bank’s pocket, consider using this tax return to pay off a portion of any loans or debt you’ve accrued. While lowering the amount of money you owe, your interest repayments will also drop, taking you one step closer to being debt-free. You’ll also start the new financial year off in a great position!

Deposit it into your mortgage offset account
If your bank has provided you with a mortgage offset account, placing your tax return dollars in there can mean you’ll be paying the bank less interest. If you have a $500,000 home loan and you deposit a tax return of $3000 into your offset account you’ll only be charged interest on the remaining $497,000 for as long as that extra money is in there. You can take this money out and add as you please and will only be charged interest on what is owing within the account.

Tax returns can have a large impact on our lives, meaning finding the right way to spend or invest it is essential. If you don’t need your tax return to support you financially this year, why not look into the above options to set yourself up for a prosperous financial year.