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Australians are proving themselves to be smart planners when it comes to making the most of their tax refund by prioritising sound financial goals over more exciting spends.
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According to the fifth annual Taxing Times report by Bankwest, 35.6 per cent of Australians will use their tax refund to pay off debt while 31.5 per cent will put their mid-year receipt into savings.
“Across the board we’re seeing individuals dedicate more attention to their personal finances, perhaps a sign of our increasing conservatism as the economy comes off the boil as well as our higher level of familiarity and comfort with managing our money,” Bankwest executive general manager, retail, Mark Reid said.
“This year, Australians appear to be more considered in their financial strategy at tax time, planning to make the most of their income tax returns where they can.”
The Taxing Times report showed the average expected refund remained stable at $2,033 compared with $2,017 a year earlier, although this was down 12 per cent from 2011. There is significant variation between the states, signifying the narrowing gap between outperforming and underperforming economies.
Western Australians are expecting the largest tax refund this year ($2,691) and South Australians the smallest ($1,683). These compare with the national average of $2,033.
Australians are also diversifying how they spend their tax refund. Some 10.2 per cent say they intend to use it to buy shares or other investments, while term deposit accounts, voluntary contributions to superannuation funds and other types of savings deposit options are seeing similar uplifts.
Actions appear to be driven by long-term financial considerations, with 40.3 per cent stating that they would use the cash injection to pay off their mortgage – up from 33.5 per cent last year.
