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The best way to use your 2019-20 tax return
Putting cash away for a rainy day and paying down debt are two “sensible strategies” for using your 2019-20 tax return, according to an accountant.
The best way to use your 2019-20 tax return
Putting cash away for a rainy day and paying down debt are two “sensible strategies” for using your 2019-20 tax return, according to an accountant.
Speaking to nestegg, H&R Block’s director of tax communications, Mark Chapman, has acknowledged that this time of year sees many Australians receive a cash windfall, whether expected or unexpected.
When asked what Australians should be doing with such money, he replied that he couldn’t provide a general recommendation because “it really depends on your personal circumstances”.
“I wouldn’t dream of advising people what to do with their return, although every year we see that the majority of people either save it or use [it] to pay down debt accrued over the previous year – both sensible strategies.”
He pointed to H&R Block’s research on the matter, which has revealed that most people do use their refund to either pay down debt – such as credit cards or their mortgage – or they put it in a savings account.
“Either way, they are making their money work for them long term, either by reducing interest payable on debt or earning interest on savings (although savings rates are fairly negligible at present),” Mr Chapman commented.
For those people who are in a financial position to do either of these things, Mr Chapman said it “definitely makes sense”.
But “unfortunately in these financially difficult times, many people have no option but to spend it on essentials like food and utility bills”.
The tax director said he can “certainly understand” why people may not be thinking long term if their “financial position requires it”.
And for those people who do have their tax return burning a hole in their hip pocket, Mr Chapman had the following to say: “For the small minority who choose to blow it on an extravagant luxury, like a holiday or new jewellery, good luck if you can afford it!”
“But if you can’t, maybe use it more wisely instead,” he conceded.
Mr Chapman previously revealed to nestegg some of the most bizarre attempted tax deductions he has seen – both those that were approved by the ATO and those that were knocked back.
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