New data from the Australian Taxation Office shows more than 4.1 million refunds have been issued so far, averaging $2484 each. The average refund delivered in 2019 was $2464.
Using a tax refund wisely is more important than ever because of economic uncertainty.
Planning advisers say your top refund priority should be creating a cash buffer for emergency funding should the Coronavirus hit even harder.
Any sort of cash buffer will be a massive help if things turn bad, such as you lose your job or there’s cashflow issues if JobKeeper gets switched off. Work out what would be the minimum level of cash that would make you feel comfortable and allow you to sleep well at night.
Paying down high-interest debts such as credit cards can deliver a big bang for your buck. With average interest rates near 20 per cent for credit cards, the reduced debt delivers an effective 20 per cent financial return.
Superannuation contributions are another way to multiply the benefits of a tax refund.
Consider making a tax-deductible contribution to super. A $1,000 deductible contribution could increase your refund next year by $340 although you do lose $150 tax in the fund.
Or consider a co-contribution to super – if you put in $1000 you could get up to $500 additional tax refund depending on your income level.
Even a contribution of $1,000 to your spouse’s super if she earns less than $37,000. That could give you an extra refund next year of $540 and the contribution isn’t taxed in her fund.
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