Save or Splurge: smart ways to use your tax refund

August 13, 2014
Melanie O'Connell

Mortgage Choice reveals its top tips for Australians receiving a refund

At this time of year, Australians across the country are filing their tax return online or sending a year’s worth of paperwork over for their accountant to lodge. Though essential, filing your tax return is often a tedious chore. Thankfully, for many, there is a reward that awaits them – a tax refund.

According to the Australian Tax Office, the average Australian taxpayer received a return of around $2,000 following the 2012/2013 financial year.

While some people may consider their tax refund a mid-year bonus, and spend the cash on an exuberant purchase or a luxurious holiday, local Mortgage Choice franchise owner Melanie O’Connell says it often pays to spend the money more wisely.

“Everyone who pays tax on their income throughout the financial year looks forward to receiving a tax refund. However, to ensure they get the most out of the extra money, Australians need to be smart about the way they spend the cash,” says Mrs O’Connell.

“I recommend using your tax refund this year as an opportunity to plan for the future – whether to grow your savings or pay off debts.”

To help Australians use their tax refund wisely this year, Mortgage Choice provides the following top tips:

Take it to the bank: The simplest (and one of the smartest) way to use your tax refund is by transferring it to a high interest savings account. Whether you are saving up for a new car or a deposit to buy your first house, this lump sum injection will help speed up the process. Once the cash is in your savings account, leave the money untouched and watch the interest add up.

Pay off and cancel your credit card: According to Mortgage Choice’s inaugural 2014 Money Survey, 35% of Australians with a credit card currently owe $5,000 or more. Not only are the interest rates on credit cards notoriously high, but many people get stuck using a credit card because they can’t break the cycle as interest continues to accrue. So if you’ve got credit card debt to pay off using your tax refund, doing so should be a priority. Then cancel the card so you can start the new financial year on the right foot.

Make a voluntary HECS-HELP contribution: Young Australians who have secured a graduate job or are still in their first few years of work may not yet earn enough to start paying off their HECS debt. While compulsory payments won’t kick in until you earn $53,345 or above in the 2014/2015 income year, you can make a voluntary lump sum payment towards the debt at any time. Plus, for a repayment of $500 or more, you will receive a bonus of 5 per cent of the value of your payment, which is credited against your debt. On a $500 contribution, this amounts to an extra $25 off your debt – and every little bit helps!

Top up your mortgage: If you are in the middle of your financial life cycle, chances are your biggest debt is a mortgage. Use your tax refund as an opportunity to make a voluntary repayment on your mortgage, in addition to your usual payments. If you do this each year, you may be able to pay off your early and save on the total interest payable.

Inject it into super: If you are looking towards retirement and wondering whether your nest egg is big enough, tax refunds are a great opportunity to grow your superannuation. You can make a contribution at any time of the year by depositing funds straight into your super.

If you want to learn more about your finance options, call us on 0435 048 118 or visit


For further information or to arrange an interview, please contact:

Melanie O’Connell

Mortgage Choice

02) 4627 7447 or 0435 048 118



Important information

This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the advice, consider its appropriateness to your circumstances.


About Mortgage Choice

Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs.

Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.

Since that time, the company has grown and developed into a fully fledged financial services provider.

Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance.

Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers.

Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).

Mortgage Choice holds an Australian Credit Licence: no. 382869 and Mortgage Choice Financial Planning Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.

Recent recognition: 2013, 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social Responsibility Program; 2012 Australian Broking Awards Best Training and Education;   No.1 on The Adviser magazine’s 2012, 2011, 2010 and 2009 Top 25 Brokerages list; 2012, 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list. 


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