Here are some of the best ways to maximise your tax return
As the time to get your tax returns filed fast approaches, new data suggests that many Australians are yet to complete the task.
According to data from the ATO, approximately 20% of Australians fail to lodge their tax return before the October 31 deadline.
While filing a tax return can seem like massive task, it is important for Australians to meet their tax deadline otherwise they face a hefty fine. Those who don’t complete their tax return on time can incur a penalty of $850 plus interest. For those who do complete their tax return on time not only avoid being fined, but are often rewarded with a nice tax return.
For those who do receive a tax refund, it is important to use the money wisely. It may be tempting to spend your tax return on a new TV or something else you’ve had your eye on for a while but why not make the most of your tax return this year? Your tax refund could be a good opportunity to plan for the future – whether that involves growing your savings or paying off your debts.
Some top tips of how to use your tax return wisely
Add to your home loan deposit
With banks competing for owner occupied business, there’s never been a better time to apply for a home loan. So why not put your tax return toward your home loan deposit and get yourself on the property ladder sooner rather than later?
Target high interest debt
According to Mortgage Choice’s 2015 Money Survey, more than 50% of Australians have some form of credit card debt. Of those with credit card debt, more than 33% have more than $5,000 owing. A lot of people with credit card debt tend to only make the minimum repayments each month. Given the interest rates on credit cards are notoriously high, many get stuck with ongoing debt on their credit card because they can’t break the cycle. Using your tax return to pay down or pay off debt is the perfect solution.
Start or increase your emergency fund
Life is full of unexpected surprises, some more expensive than others. Because of this, it is always a good idea to have an emergency fund. You can use some or all of the money you receive from your tax return to either start or build an emergency fund. Placing the money in a hard to access, high interest savings account will not only earn and accumulate interest, but will provide you with peace of mind.
Top up your mortgage
For those with a mortgage, your tax return can provide you with the perfect opportunity to make an additional payment or a great addition to your offset account if you have one. When it comes to your mortgage, every extra cent counts. If you put your tax refund into your mortgage each year, you may be able to save thousands of dollars in interest and slash years off your loan.
Inject it into super
If you don’t have a mortgage, another great way to use your tax refund is by putting it into your super. This will help you to grow your nest egg, which will help you tremendously in retirement. You can make a contribution at any time of the year by depositing funds straight into your super.
If you would like learn more about your home loan or financial advice options, call me on 0447277321 or visit www.mortgagechoice.com.au/tara.williams
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Mortgage Choice Pilbara & Kimberley
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.