In Australia, over ten million taxpayers are set to receive tax refunds from the Australian Taxation Office (ATO) this year, with the average expected refund being $1,519. Research by Finder reveals that a significant portion of these refunds will be earmarked for savings, as households continue to navigate the challenges posed by the rising cost of living.
Tax returns can be lodged starting from July 1, and according to Finder, approximately 52% of taxpayers plan to allocate their refunds towards savings. Conversely, about 19% intend to use their funds to settle household bills, reflecting the priority placed on essential expenses during these financially straining times. Graham Cooke, head of consumer research at Finder, emphasised that many Australians view their tax refunds as a form of enforced saving amid ongoing economic pressures.
The financial landscape remains challenging, with families forced to deplete their savings accounts while managing higher interest rates and everyday expenses. Finder’s findings indicate that 43% of Australians possess less than $1,000 in their bank accounts, with an average balance of merely $215 among this group. Experts suggest that having an emergency fund to cover at least three months’ worth of expenses is critical to providing financial safety, especially for urgent costs that may arise.
Cooke highlights the importance of maintaining an emergency fund, stating that the security it provides cannot be underestimated. He cites that countless individuals have had to tap into their emergency savings just to manage basic needs, such as fuel and utilities. While the majority of Australians intend to use their refunds for saving or bill payments, some plan to treat themselves, with 7% considering holidays, 6% aiming to pay off their mortgage, and 5% eyeing shopping sprees. Additionally, debt repayment is also a priority, with 4% looking to reduce credit card debt and 1% focusing on Buy Now Pay Later or personal loans.
Nonetheless, financial experts advise against rushing to lodge tax returns on July 1. Early filers are reportedly twice as likely to make errors in their submissions and may miss out on important information. CPA Australia’s tax lead, Jenny Wong, explains that many who file early frequently find themselves needing to amend their returns later on, suggesting that delaying until late July can be beneficial as most necessary information from employers and financial institutions is typically auto-loaded by that time.
In preparation, Australians are encouraged to start organising their tax information, ensuring receipts and records are gathered and that personal details are current to maximise their entitlements.
In summary, as millions of Australians prepare for tax season, the anticipated refunds are seen as a vital resource for both saving and managing household expenses, highlighting the financial pressures faced by many. The advice from experts to file thoughtfully and consider utilising refunds for savings underscores the importance of financial planning in times of economic uncertainty.
