New research has shown that almost half (48%) of Australian taxpayers are intending to save their tax refund this financial year.
ME Bank conducted the survey of 1,000 Australians in May this year and found most people are looking to spread their refund across a range of goals.
The study’s release comes as Treasurer Josh Frydenberg has promised that low and middle-income earners will see their tax rebate immediately, should their proposed tax cuts pass through Parliament at the end of the week.
.@ljayes: When will low and middle income earners see the $1080 in their bank account?@JoshFrydenberg: If the legislation passes this week, then people will get this money in their account next week.— Sky News Australia (@SkyNewsAust) July 1, 2019
MORE: https://t.co/uRV7zabpmp #firstedition pic.twitter.com/J9ryx8WMKH
ME’s research shows that around 19% of Australians will be using this money on non-discretionary items like bills and necessities, while 17% will be spending it on discretionary items.
For that 17%, the most sought after lavish items include:
- A holiday (50%)
- Clothes and shoes (40%)
- Eating out/ entertainment (31%)
ME’s General Manager of Deposits, John Powell, said the findings suggest many Australians are using tax time as an opportunity to build up a savings buffer.
“If used wisely, a tax refund can be a bonus boost to your overall financial position,” Mr Powell said.
“Injecting your tax refund into your debt is a great strategy.
“It can help you get in control of your repayments and reduce the ongoing costs in your monthly budget.”
Top 5 tips to maximise your tax return
Chartered Accountants Australia and New Zealand (CA ANZ) Senior Tax Advocate, Susan Franks, has compiled a list of tips to help you maximise your refund this end of financial year.
“Tax time can send many of us into a panicked frenzy as we race to find receipts and look up what we can claim, in order to submit our return on time,” Ms Franks said.
“But if you do a little preparation and are aware of the rules which might impact upon you, tax time can be a relatively painless experience, and you may be pleasantly surprised with your tax refund.”
Here are Ms Franks top five tips to get the most out of this year’s tax return.
1. Keep a record of all your purchases.
Keeping your records from the start will ensure you don’t end up paying more tax than you need to.
2. Look into making extra contributions to your superannuation.
Changes have been made which allow you to make extra contributions, so it is important to know if you qualify.
3. Report all sources of income.
Amounts received from second jobs, for renting out a room or a house on Airbnb or providing a service in Airtasker or selling trading stock on e-bay will generally be income.
The Australian Tax Office (ATO) receives information about these payments so ensure that you report them in your tax return.
4. Consider being charitable.
Not only is giving to a charity that is a deductible gift recipient worthwhile, contributions over $2 are also deductible.
5. Know what you can claim as expenses
An expense may be your vehicle, clothing or computer which have helped you earn income during the year, however this varies from job-to-job.
Take care not to claim amounts that relate to private use.
Dodgy deductions under scrutiny
Ms Franks has also warned those making illegitimate claims in their returns will face heavier penalties than previous years.
“The ATO has cottoned onto people making unusual claims, they are now using sophisticated analytics to compare taxpayers to others in similar occupations earning a similar salary,” Franks said.
“Taxpayers should also take advantage of the services around them – tax agent fees are deductible in the following income year.”
The ATO recommends waiting a few weeks before lodging your tax return, as most employers have until July 31st to finalise employees’ income statements.
Savings.com.au does not provide tax advice. This material has not been prepared by Savings.com.au and is for informational purposes only, and is not intended to provide, and should not be relied on for tax advice.
For tax advice relevant to you, visit the ATO or consult an independent tax advisor
- CBA moves to stop financial abuse via digital banking
- What’s the going tooth fairy rate?
- Westpac slashes home loan rates, HSBC edges closer to the 1% mark
- HomeBuilder winners and losers