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Taxing your bills: Aussies will use their tax returns to help with rising expenses

Posted: 23 June 2022 3:03 pm
News
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Millions of struggling households will use their tax return to help with rising bills, according to new research by Finder.

A new nationally representative survey of 1,001 Australians found 12% – equivalent to 2.3 million people – will use their tax return to pay for household bills amid the cost of living crisis.

More than 1 in 4 (22%) will use their refund to pay down debt – including mortgages (8%), credit cards (7%), buy now pay later debt (4%), personal loans (2%) and HECS debt (1%).

The majority of Australians who do a tax return get money back (80%) – the average Australian tax refund is roughly $2,500.

Sarah Megginson, senior editor of money at Finder, said Australians were being very careful with their money.

"Aussies aren't in the mood for splurging this tax season.

"As the country heads into an economic downturn, many people are looking to use that extra cash to keep their heads above water."

The research revealed just 53% 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% will be claiming home office expenses this year.

The data shows 1 in 5 Australians (20%) plan to claim their phone bills, while the same number (20%) plan to claim their charitable contributions.

"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.

"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."

Megginson said storing the extra savings is a great way to safeguard against any unforeseen circumstances that might occur.

"We're in an economic crisis with household expenses soaring, people struggling to afford rent and mortgage repayments and energy bills doubling in certain states.

"Think really carefully about what you do with your return. Now is a good time to consolidate debt, get on top of any outstanding bills or stash this cash into a savings account."

Almost 1 in 10 (9%) plan to spend the money on a holiday, while others are investing the money in shares (4%) or cryptocurrency (1%).

"Aussies can start lodging their tax returns from 1 July. Most people will need to wait a couple of weeks for an income statement from their employer.

"If you're lodging your own tax return, you need to lodge it by 31 October.

"If you are looking for a different way to put your tax return to work, Finder Earn offers a return of up to 6.01% p.a. for deposits of up to $100,000, with interest paid daily.

"You can withdraw your capital at any time, so this can be used as a short-term or long-term option to grow your wealth," Megginson said.

How do you plan to spend your tax return this year?
Put it in savings41%
I'm not expecting a tax return35%
Use it to pay household bills12%
Use it on a holiday9%
Put it towards paying off my mortgage8%
Go shopping7%
Pay off my credit card7%
Invest in shares4%
Pay off my buy now pay later debt4%
Pay off my personal loan2%
Other2%
Put it towards my HECS debt1%
Invest in cryptocurrency1%
Source: Finder survey of 1,001 respondents, May 2022
*Respondents could select all that apply.
Which of the following do you plan to claim on tax this end of financial year?
I don’t plan to claim anything47%
Home office expenses22%
Phone bills20%
Charitable giving20%
Internet bills19%
Car/travel expenses (e.g. taxis, petrol etc)18%
Clothing/dry cleaning14%
Energy bills12%
Home repairs3%
Other1%
Source: Finder survey of 1,001 respondents, May 2022
*Respondents could select all that apply.

Want to maximise your tax return? Visit Finder's tips on the top 5 tax deductions you can claim.

Get more from Finder

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