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How to spend tax refund- July 2013

What’s the best way to spend your tax refund? A few good ideas

It is not unusual for a person to let out a big whoop of joy when they receive their tax refund but bear in mind – the refund is tax you have overpaid, not the lottery. To ensure you make the most of money that you have worked hard for, a wealth management expert has compiled a guide on where you should deposit your tax refund, depending on which stage you are at in your life.

First job or tertiary student

  • reduce your credit card debt
  • deposit it into a high-interest savings account but be sure to check the fine print – many accounts will entice you with a high interest rate but the headline return may drop once your money has been in there for between four to six months.

House savers

  • deposit it into a high-interest savings account, as long as you do not have a substantial credit card debt or high-interest car loan.

Mortgage payers

  • pay lump sums into your mortgage but be sure to check your mortgage arrangements as fixed-rate mortgages and many variable-rate home loans will not allow you to deposit lump sums or pay out early.

Mortgage payers with children

  • children’s school fees
  • Christmas presents
  • mortgage repayments
  • credit card debt
  • electricity bill
  • deposit on a much-needed new car
  • a holiday for the frazzled nerves.

Business owner

  • reinvest the money directly into your business
  • credit card debt
  • mortgage repayments
  • quarterly business activity statement payments
  • year-end tax bill.

Pre-retirees

  • contribute to your superannuation
  • high-interest savings account
  • acquire high-yielding shares that deliver dividends
  • mortgage repayments, as your mortgage may be within reach of being paid out, if it has not been already.

Retirees

  • high-interest savings account instead of a bank transaction account where you will receive zero or minimal interest
  • high yields that ensure your savings are enhanced before they are diminished by inflation.

Whichever stage you find yourself at, be sure to exercise restraint and a good deal of common sense when deciding where to deposit your tax refund.

DISCLAIMER:All information provided in this publication is of a general nature only and is not personal financial or investment advice. It does not take into account your particular objectives and circumstances. No person should act on the basis of this information without first obtaining and following the advice of a suitably qualified professional advisor. To the fullest extent permitted by law, no person involved in producing, distributing or providing the information in this publication (including Taxpayers Australia Incorporated, each of its directors, councilors, employees and contractors and the editors or authors of the information) will be liable in any way for any loss or damage suffered by any person through the use of or access to this information. The Copyright is owned exclusively by Taxpayers Australia Inc (ABN 96 075 950 284).


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