What do you do with your tax-return?

The 30th of June marked the end of each current financial year – the time when we gather together all our paperwork and receipts in preparation for filing our tax return. It’s traditionally the time when a lot of financial decisions are made or re-evaluated.

We’re already a few days into the new financial year and anybody who is a PAYG employee will be receiving their group certificate soon and be preparing to submit their annual returns to the Taxation Office.

There are many ways to get the paperwork done – you can do it yourself by filling in the paper forms and posting them in; or by going online you can fill in the information using the appropriate forms from the ATO website and lodge it electronically. There are also tax agents and accountants who are more than willing to do this task for you, and in many cases you can claim their fee as a legitimate deduction next year.

Using a tax professional can save you the worry of keeping up with the changing rules about deductions and in many cases they can also assist with getting you a higher refund than you might have expected if you’re battling with the paperwork yourself.

If you’re fortunate enough to be getting one, there’s always the question of what to do with your refund. Is it for spending or saving? 

Of course, what many people fail to realise is that this money is actually a part of their income. It was just paid to the Taxation office in advance, to ensure their tax obligations were met. So if you are one of those people who regularly use their credit card as an extension of their wages – now is the perfect time to repay that debt. 

If your credit card balance is cleared every month, your tax refund could be used to help reduce your mortgage. This in turn will lower the interest payable (as it’s calculated daily on the balance of what you owe) and will help to get your property paid off a little faster. Sounds tempting, doesn’t it?

Then of course, if you’re fortunate enough to be in the small minority of people that have no debt then you get to make the decision as to whether you ‘spend it’ or ‘save it’. 

Perhaps you consider this money to be a non-conventional form of saving and you’ve already chosen to purchase something that you’ve been ‘saving for’. You might have enough to get that TV you’ve wanted, or perhaps a holiday is in order.

But let me ask just one question before you sail off to the shops. If your hot water system dies tomorrow, do you already have enough money saved to replace it? Without needing to use any form of credit?

These days it’s no longer considered unfashionable to have a savings account and there are plenty of long and short term savings options available, if that’s what you’ve decided to do with the money.

Putting some money away for your long term future is a great idea, but it’s also important to have a back-up plan to pay for any unexpected expenses when they occur.

Regardless of what you decide, for every person and/or household that has an income now is the time to assess your money and how you’re managing. If you’ve fallen behind in your savings plan – then now is the time to make amends.

If you’re constantly falling behind in paying your bills when they’re due – then now is the time to organise or re-organise your budget.

 

Carmel McCartin – Budget Bitch 

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