5 Smart Ways to make use of your tax refund this year
Your tax refund for the year can be an ideal opportunity to save money, get rid of the burden of debt, or take a ‘long-term view for your kids. This year, prior to you heading to the stores in search of a tax-free purchase, think about the way your tax refund might be the most significant impact on your lifestyle and financial situation.
On Dsaccountants there are discussions with a lot of Australians (and tax accountants) on the methods they’re planning to spend their tax refunds. Let’s examine some of their suggestions.
1. Super contribution to top-up
ASFA estimates that in order to afford an adequate lifestyle the need for an amount of lump sum, which is 640,000 dollars for couples or $545,000 for a single individual when they reach retirement age. For the majority of us, these are huge amounts. By boosting your super early, you have more time for your savings to expand. Contact your superannuation fund or advisor for assistance and to learn how you can make the transfer of your tax rebate to your super fund. Your “future self” will thank you for it when you retire!
2. Purchase equipment for work that is priced at more than $300 and gets a bigger deduction on your next tax return
If you’ve been putting off buying any major-ticket equipment for work, such as tools, computers, and equipment, then using your tax refund might be a viable alternative. Items that are related to work that cost more than $300 have to get depreciated in your “effective life” of the item. If you purchase these products towards the end of the fiscal year, the tax benefit when you file your tax return next year is very minimal. If you buy items earlier in the year, namely July or August, your depreciation calculations will be able to cover longer and will result in an increase in deductions when you file your next tax return. Tax professionals can make it easier for you.
3. Put your tax refund into the form of a term deposit to help your children
You can set aside your tax refunds each year, to ensure that in the future, you will be able to fund future large-ticket costs for your kids. Put your tax refund into an investment that will last for a long time or another long-term, secure savings that earn interest. Later, you could use it to fund your children’s university education or for their first automobile. If your children have grown older they can get an edge without the cost on your pocket.
4. Pay off debts from credit cards or loan
Are you in the middle of an outstanding credit card balance or personal loan that you appear to pay off for years? Think about using the tax refund you received to lower the credit card debt you have or make it easier to pay the balance off. The interest payments will decrease once you have reduced the outstanding balance. When you’re debt-free begin using your money to support yourself instead of making bank profits by making the interest on your credit card for a lifetime.
5. Transfer your tax refund to an account for mortgage offset
If you’re a homeowner and your mortgage provider may have a “mortgage offset” option. An offset mortgage account is fundamentally the equivalent of a savings account. Instead of earning the interest, you earn on your savings each month, the offset balance will be subtracted from your current mortgage loan balance in order to determine the interest portion that you pay for your mortgage. You’ll pay the least amount of interest to your mortgage, which means an extra amount of money to put in your pockets. You’ll pay your mortgage off faster and pay less cash in interest costs as your offset balance remains available to you for emergencies.
