How to get the most money back from your tax return

One in three Australians are planning to use their tax returns to pay for essentials items but experts say these are the best ways you can spend your tax return.

ONE in three Australians plan on using money back from their tax return to pay for essential items such as food and rent, alarming new figures show.

Millions of middle and low income earners will receive a tax cash boost of up to $1080 when they file their return thanks to Prime Minister Scott Morrison’s tax cuts.

New research from accounting software firm MYOB found that 25 per cent plan to use their money wisely and invest it.

About 16 per cent will spend it on a holiday, while one in six people say they usually don’t get any money back.

MORE: Australians warned not to rush lodging their tax return

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MYOB general manager of partners Blake Collinssaid for most people the temptation to splash out once they received their return was hard to resist.

“What we are likely to see is an uptick in the sale of goods such as technology in the next quarter,” he said.

“Many Australians are also using their tax return to catch up on essential purchases like groceries and bills.

“If you don’t need to do that it’s a great opportunity to step back and have a look at what you can do with the money.”

While a majority of Australians do receive cash back at tax time, they dread filing their return.

Sorting through your receipts at tax time can be an arduous task.

Westpac analysis found one in three people would rather do household chores instead.

Westpac’s retail and premium bank general manager, Jane Watts, said getting a tax refund was the prime opportunity to smash down some debt.

“While it can be tempting to splurge any refunded tax money on a treat or something you’ve had your eye on, consider putting it towards bills or existing debts,” Ms Watts said.

“With the average tax return for Australians coming in at $2571, putting this amount towards any outstanding repayments like a loan or credit card could help you save in the longer term by paying this debt down sooner.”

Ms Watts said it was also a great opportunity for mortgage customers to pay a chunk off their mortgage.

“With home loan interest rates reaching historical lows, now is a good time to consider putting your tax refund towards getting ahead on your mortgage repayments,” she said.

“Or first home buyers can put the additional funds towards their deposit, with great rates and special offers available for Australians looking to purchase their first home to live in.”

Mr Collins said being organised and not filing in a rush paid off.

“Maximise your refund by identifying all those expenses you can claim,” he said.

“Typical claims can include laundry if you are required to wear a uniform to work, education expenses, luggage if you travel for work and sunglasses if you work outdoors.”

@sophieelsworth

TAX TIPS

• Get your receipts organised.

• Don’t rush your return.

• Check your MyGov login to see what prefill information is available.

• Use the ATO guidelines to see what deductions you can make.

• Be honest.

• Engage a professional if you need a helping hand.