Score! The tax man has given thousands of Australians a windfall in the form of a refund on their tax bill. But experts have urged us to spend this money wisely, given precarious economic conditions.

As of September 6, the Tax Office had received 5.5 million returns and issued 4.5 million refunds for the 2015-16 financial year, according to an ATO spokesperson.

The total monetary value of these refunds was $10.6 billion, with an average return of $2362, the spokesperson said.

ME Bank savings expert Nic Emery said it is crucial we spend this money wisely.

“Firstly, a tax refund is often money that you haven’t already factored into your household budget. That makes it much easier to put the cash to work improving your financial wellbeing, and even a small tax refund can make a big difference to your wealth when it’s used wisely.”

Here are five ways to do just that.

Pay down your credit card

Your first instinct might be to save the money for a rainy day. But according to an analysis by comparison website Mozo, this would almost certainly be a mistake if you have any credit card debt.

“Successive rate cuts have decimated the value of at-call savings accounts with the average rate now stagnating at 2.03 per cent and we could see savings interest rates drop even further with some experts predicting another cash rate cut this year,” Mozo director Kirsty Lamont said.

“Our analysis shows paying down expensive credit card debt is the best use of your tax refund dollars with the average credit cardholder saving as much as $367 on interest payments over the course of one year.”

This was echoed by the ME Bank spokesman.

“Home loan interest rates may have plummeted but some credit cards with the bells and whistles are still charging interest rates close to 20 per cent per annum,” Mr Emery said.

“If that sounds like you, use your tax refund to pay down any high interest debt, and take the opportunity to shop around for a cheaper card. If you’re paying more than 12 per cent per annum on your credit card, you might be paying too much.”

Extra home loan repayments

The returns may not match credit debt, but it’s definitely worth considering. Photo: Getty

Mozo’s analysis found that extra mortgage repayments were also a good use of a tax refund, though not as good as credit card repayments.

Mortgagees could save up to $144 in repayments over the year on a typical $300,000 home loan if they put a $2112 tax refund to this purpose.

ME Bank’s Mr Emery said paying down a home loan with your refund could shave years off the term. His analysis showed even greater benefits from a larger refund.

“As an example, you could save close to $11,000 in interest and reduce the life of your loan by nine months by tipping a $5000 tax refund after one year into your home loan, assuming a typical loan amount of $330,000 repaid over 24 years with a consistent variable rate of 4.88 per cent per annum and no redraws or additional repayments.”

Extra super

There’s more to super than just salary sacrifice. Photo: Getty

Many Australians may forget that they can make extra contributions to their super funds, aside from any salary sacrificing and the guaranteed 9.5 per cent from their employer.

These are known as non-concessional contributions because you don’t get any tax breaks on these amounts. The full amount is simply invested in your fund.

“Investing in the future by boosting your super also proved to be a rewarding way to use your tax refund. Popping your entire tax refund in an average super account could see the balance balloon to over $7000 over the next 30 years,” Mozo’s Kirsty Lamont said.

But keep in mind there are annual limits to non-concessional contributions. Read more about those limits here.

The experts also suggested: (i) stashing a tax refund in a longer term deposit (more than 12 months to get the most competitive rates), or (ii) putting it toward minor repairs before they turn into much bigger expenses – such as a car service, much-needed dental work or repairing those broken roof tiles before the next storm comes along.