The Australian Taxation Office has so far paid out more than $11.4 billion in tax refunds to 4.5 million Australians.
As of August 20, the average refund for the past financial year was $2506, down from $2562 this time last year.
And the majority of Australians plan to keep it in the bank.
Data provided exclusively to The New Daily by ME Bank shows 58 per cent of Australians plan to save their refunds this year, while 21 per cent will use them to pay down their home loan.
When ME Bank posed the same question in June 2019, 49 per cent said they would save their refunds and 17 per cent said they would put them towards their mortgage repayments.
The survey asked 1000 Australian adults to choose ‘all that apply’ when quizzed about their spending intentions.
ME general manager of personal banking Claudio Mazzarella said the noticeable shift since 2019 showed the pandemic had changed the nation’s financial habits.
This survey illustrates how wary Australians are feeling in this economic climate,” he said.
Almost one in five (18 per cent) said they would plough the cash into shares or superannuation – up from 16 per cent in June 2019 – while a similar number (22 per cent) said they would spend it on discretionary items such as clothes and holidays, down from 23 per cent a year ago.
Of the 22 per cent planning to splash the cash, 50 per cent said they would put it towards eating out, entertainment or other recreational activities, which was a big jump from 31 per cent last year.
“Naturally, some Australians will be keen to start socialising with friends and family as COVID-19 restrictions gradually wind down in some states,” Mr Mazzarella said.
New clothes and shoes weren’t far behind on the wish list, with 48 per cent saying this is how they planned to use their refunds.
Holidays came a close third, with 45 per cent.
This last figure was down from 50 per cent in 2019, but with international borders closed for the foreseeable future, local tourism operators will be encouraged to hear that 45 per cent of Australians plan to spend their refunds on holidays.
The survey results come after online marketplace Payday Deals reported a 49 per cent jump in outdoor equipment sales in July and August, compared to the June quarter, as Australians sought ways to travel whilst socially-distancing.
Four smart ways to use your tax refund
- Put it into your savings account – Mr Mazzarella recommends stowing at least six months’ worth of expenses into a savings account, in case of an emergency. “If you just leave it in a transaction account, it’s too easy to dip in, even unintentionally, for non-essential expenses,” he said. “Consider locking it away in a separate savings account or term-deposit.”
- Spend it on maintaining your home, car or health. This can help you avoid larger expenses down the track
- Pay off debt – Reducing the amount you owe will reduce stress and save you lots of money over the long term. “Start with higher rate debt first, such as credit cards, personal loans, student loans and car loans or leases, and consider hunting around for better rates,” Mr Mazzarella said. Getting ahead on your home loan is a good idea, too, as it could save you tens of thousands in interest over the life of the loan
- Add it to super – “Using a tax refund to grow your retirement savings is also a smart move,” Mr Mazzarella said. “Given the power of compounding returns, the more you contribute now to super the more you’ll have for retirement.” Subject to eligibility criteria, after-tax contributions are tax-deductible, too.
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