Millions of Aussies are expected to get some sweet relief in the form of money back on their tax, but you’ll be surprised about where it will be spent.
Around 80 per cent of Australians who do a tax return are expected to score an average of $2500, according to new research.
But with the cost of living skyrocketing, Aussies won’t be in the mood to splurge.
The research from Finder found that 12 per cent of Aussies – the equivalent to 2.3 million people – will use their tax return to pay for household bills amid the cost of living crisis.
More than one-in-four will use their refund to pay down debt – including mortgages, credit cards, buy now pay later debt, personal loans and HECS debt.
Almost one-in-10 plan to spend the money on a holiday, while others are investing the money in shares or cryptocurrency.
Alison Banney, money expert at Finder, said Australians were taking a cautious approach with their tax return this year.
“Inflation is quite high at the moment yet wages are staying low, and some families are really starting to struggle with the cost of living,” she said.
“Many people are looking to use the extra cash to stay afloat.”
She said where possible, stashing the extra cash in savings could be a good buffer against future uncertainty in the coming financial year.
“I’d recommend using the cash to add to your savings, consolidate debt or get your bills under control,” she added.
But the research revealed just 53 per cent of Australians plan to claim deductions this year, meaning nearly half may potentially be getting back less than they should.
With many Aussies working from home, 22 per cent will be claiming home office expenses this year, while one-in-five plan to claim their phone bills, while 20 per cent plan to claim their charitable contributions.
Sarah Megginson, senior editor of money at Finder, said when it comes to preparing your tax return, the more deductions you have, the less tax you’re liable to pay.
“It’s important to remember that a deduction doesn’t mean you get that full dollar value back in cash,” she said.
“A work-related tax deduction means you’ll pay less tax depending on your tax rate, so for instance a $100 deduction could deliver between $18 and $48 back.”
resource: news.com.au