It can often feel like a bonus when you get a tax refund. The average tax refund is almost $3000, and up to 80% of taxpayers can expect money back, so although it can feel like a headache to do your tax return, there could well be some extra cash coming your way to commend you for your efforts!

We recommend that you talk to one of our expert tax accountants to help assist you with your tax returns. They know all the up-to-date information about what deductions you can claim (things can change year to year) so make sure you don’t miss out.

Pay off high interest debt

This should be your priority as high interest loans and credit cards can easily get out of hand. List all the debt you have and start with the one that has the highest rate of interest. Especially anything over 5%. By using the extra cash from your tax return to wipe bad debt, you can save you so much more in the long term and can stop it spiralling out of control.

Have a mortgage? You could boost your repayments

Having a mortgage is probably the biggest debt you have in your lifetime; however, it is manageable debt especially if you are savvy with the mortgage you choose and the repayments you make! Using your tax refund to boost your mortgage repayments can save you thousands of dollars in interest by cutting the amount of time you have to repay your home loan. Also, if you are on a standard variable rate mortgage, you can consider an offset account which is linked to your mortgage. The more money in that offset account (which can be a savings or transaction account) reduces the amount you owe on your mortgage so your repayments will be less. If you are on a fixed rate mortgage, you can always pay a lump sum off your mortgage. You will need to check with your mortgage provider, but most will allow you to pay off extra money within a financial year. This can be around $10,000 per year so check the fine print. If you need to find a mortgage or are looking to refinance, speak to Andrew at Taxpro Mortgage and Finance who can help you find the best deal.

Use it for that one-off expense you keep avoiding

Have you smashed your phone, but haven’t got around to replacing it? Do you need a non-urgent medical procedure and keep putting it off? Does your car need a bit of TLC? Use your tax return to fix up or maintain anything that will make your life a bit easier. Often, small issues you keep putting off can turn into a larger expense in the long term.

Spend it on something that will make you happy!

It has been such a challenging time for everyone, so if you need a holiday, or want to buy something you have always wanted, take the tax return and unashamedly treat yourself! Self-care and mental health are very important so relax on a trip, go see friends if restrictions allow, or book in for a new experience. Life is short and if anything, the pandemic has shown us that you shouldn’t put things off because you never know what is around the corner.

Save it!

If you are still not sure what to do, save your money! Interest rates for savers are not great at the moment but you can still find some bank accounts that will give you a return.

If you need help with your finances in terms of financial planning, tax planning, getting a loan or insurance cover, please give our Taxpro team a call. We have a number of experts here in Balcatta, Perth that will provide you with a service that benefits you best.