Here’s how Australians will be spending their tax refund. Picture: iStock
Here’s how Australians will be spending their tax refund. Picture: iStock

How to get more cash back on your tax return

A record number of Australians have rushed to lodge their tax returns and many will be making good use of any money they get back.

Latest statistics from the Australian Taxation Office have found more than 2.05 million people have lodged their returns so far - the highest ever during this period.

And of those, 727,000 refunds have been issued totalling more than $1.72 billion - the average refund is $2371.

But exclusive research from accounting software firm MYOB quizzed 1000 Australians and found many people will be making the most of any cash back received:

• 25 per cent will use it to catch up on bills.

• 23 per cent will invest it.

• 13 per cent will use it to supplement lost income during the pandemic.

• 10 per cent to pay for a holiday.

But people are being urged to make sure they take time when lodging their returns to avoid making errors and slow down the processing of claims.

The Tax Institute's Robyn Jacobson warned "it's not always ideal to lodge in early July".

 

The Tax Institute's senior advocate Robyn Jacobson. Picture: Tony Gough
The Tax Institute's senior advocate Robyn Jacobson. Picture: Tony Gough

 

"This is primarily because third-party information such as from banks, health insurance providers and public companies that have paid dividends takes a while to come through to the ATO," she said.

She said for many people who had been left cash-strapped during the pandemic, a return would provide a much-need financial helping hand.

MYOB's chief economist Jon Manning said many Australians were eager to get money back and it could be a larger amount than expected due to drops to income.

"You've probably been taxed as if you earned the same amount of money for a full financial year but you are only getting the income that is a subset of that," he said.

Mr Manning said it was vital people who were able to get money back used it wisely.

"Use it to catch up on bills or even make payments on something like your mortgage," he said.

"But if you don't require the money now you could also consider investing it, but you certainly wouldn't invest it in the bank, given their low interest rates."

This year most employers will be distributing income statements - previously know as a PAYG payment summary or the old-fashioned term, the group certificate - via myGov.

This means employers are no longer required to hand over to employees their income information, instead it should appear via myGov by July 31.

Other financial information which automatically appears in myGov over the coming weeks is provided by health funds, banks and government agencies.

The Reserve Bank of Australia kept the cash rate on hold at 0.25 per cent this month and while this is great news for borrowers, it's the opposite for those with cash in the bank.

Many savings interest rates are below 1 per cent, making it impossible for savers to get any decent returns on parking their money in online savings or term deposit accounts.

Financial adviser Scott Haywood has urged people who received money back to tackle debt, with the highest interest rates first.

"This could include credit cards, a car loan or a personal loan," he said.

"Certainly use it wisely."

Originally published as How to get more cash back on your tax return


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