No fun refunds, tax refund go on household bills

Many Aussies expect little joy from refunds, but there are ways to capitalise on your tax return

Over 9 million Australians (46%) expect a tax refund this year, with the average refund anticipated to be $1,288. That’s the good news.

Nonetheless, new research from Finder* reveals that almost 1 in 4 taxpayers plan to use their refund to pay household bills as expenses such as insurance and electricity burn bigger holes in their pockets. Yet, there are other ways to maximise your tax return. Here are five strategies worth considering.

1. Pay off debt

One sensible way to use your tax refund is to pay down any outstanding liabilities, such as credit cards, buy-now-pay-later debts, personal loans, or mortgages. While this suggestion may not be popular—only 1 in 10 (9%) Australians plan to put their refund towards paying off their mortgage as interest rates remain high, according to Finder—these debts can quickly accumulate. Making extra payments can be a positive and effective way to get ahead. Start with the debts that have the highest interest rates, usually credit cards.

2. Give your savings a top-up

If you're unsure what to do immediately with any windfall, putting your tax refund into a savings account like the Community First Bank Bonus Saver account can be an alternative option, provided you deposit at least $20 and make no withdrawals or transfers every month. We also offer a Christmas Saver account, there's no requirement to save every month, plus there are no monthly fees. 

Another practical option is a term deposit. Since you won’t be able to access the money for a set period, this removes the temptation to spend it immediately, allowing it to earn interest while you decide how to use it. Community First offers terms ranging from 3-5 months up to three years.

3. Rev up your superannuation

While superannuation seems a little boring, another way to spend your tax refund is to top up your super fund. Not only is your superannuation taxed at the low tax rate of 15%, but you may also qualify for the government co-contribution of up to $500 per year (if you’re on a low income). Find out more information from the ATO.

4. Pay off university debts

If you’ve got a HECS-HELP debt, you can make a voluntary repayment against it. Moreover, these extra payments can be re-borrowed in the future, up to the current HELP loan limit. For more information, go to: https://www.studyassist.gov.au/help-loans/combined-help-loan-limit

5. Add value to your home

Renovating can add value to your property and make your house or apartment feel more like home. Just make sure you stick to a budget and avoid trying to do too much too quickly with limited funds. Even painting just one room can freshen things up.

*https://www.finder.com.au/news/tax-return-spending-2024