This year, before you race off to the shops to spend your tax refund, consider how your tax refund could have the biggest impact on your life and your finances.
At Elite Tax Success, we hear from lots of Australians (and tax accountants) about the ways they plan to spend their tax refund. Let’s look at some of their ideas. These clever money ideas could help make you more financially comfortable.
- Super contribution top-up
ASFA estimates that to support a comfortable lifestyle, we’ll need a lump sum of $640,000 for a couple and $545,000 for a single person at retirement age. (This assumes a partial Age Pension.) For most of us, those are big numbers. Boosting your super early-on means there’s more time for your super savings to grow.
Just contact your superannuation fund or advisor for advice and learn how to transfer your tax refund into your super fund – your “future self” will thank you when you retire!
- Buy work-related equipment items that cost over $300 now, for a better deduction on next year’s return
If you’ve been holding off on purchasing any big-ticket work-related items like computers, tools and work equipment, using your tax refund could be a good option.
Work related items that cost you more than $300 need to be depreciated over the “effective life” of the item. If you buy these items at the end of a financial year, the benefit on your next tax return will be very small. But if you buy the item early in the year – July or August – your depreciation calculation will cover more time and this means a bigger deduction on your next tax return. Your tax agent can help make that simple for you.
- Save your tax refund in a term deposit for your children
You can put aside your tax refunds, year after year, so in the future you can cover future big-ticket expenses for your children. Save your refund in a long term deposit or another safe long-term, interest-earning investment – later you can use it for your kids’ university education or their first car. When your children are older, you can give them a good leg-up without a hard hit to your wallet.