Debt reduction before fun when it comes to tax returns

Debt reduction before fun when it comes to tax returns

Posted on Monday, July 14 2014 at 3:01 PM

Australians who receive a tax refund this year will most likely to pay down existing debt, such as their mortgage or credit cards, according to a survey by non-bank mortgage provider, Homeloans.

When asked to identify all the ways they would spend a tax refund, 21 per
cent said they’d use it to pay down their mortgage, while one in three said
they’d put it towards other debt, such as their credit card. Just over one
quarter, 26 per cent, said they would invest any refund or put it into a
savings account.

The Homeloans poll also showed that debt reduction and investing aren’t the
only strategies on the list when it comes to tax refunds. Holidays and house
renovations (18 per cent and 13 per cent respectively) were also on
respondents’ wish lists.

The Australian Bureau of Statistics reported in May this year that
household debt in Australia is at its highest level since 1988. Australians owe
$1.8 trillion to lenders, a figure that’s the equivalent of $80,000 per person.

“The results of our survey show that far from being irresponsible with
their money, Australians are aware of the need to get their debt under control,
while shopping and holidaying are secondary considerations,” Homeloans’
national marketing manager Will Keall says.

In the 2012/2013 financial year, the average Australian taxpayer received a
tax return of around $2000, according to the Australian Tax Office (ATO).

“A sum of $2000 can make a big difference when paying off a credit card or
making a dent in your mortgage,” Keall says.

“Tax time is an opportunity to take stock of your finances and to look at
how any extra funds can benefit your financial situation.”

The Homeloans survey also revealed that nearly one third, or 31 per cent,
of respondents complete their tax return themselves. 

Other respondents of the survey said they intend to put their refund
towards paying off their HECS debt, bolstering maternity leave savings,
childcare or school fees, weddings and honeymoons, council/land rates, and
buying solar panels for the home.



Article source: