Forget the big-screen TVs: The new ways Australians are spending their tax returns
Sunday, October 6, 2013/
You can forget the big-screen TVs. More than one in three Australians plan to put their tax return straight into their bank accounts, according to a survey by H&R Block released today.
The accounting firm surveyed more than 5,400 Australians on how they planned to spend their tax returns, and found 34% planned to save their part of their return. Another 32% (respondents could chose more than one option) said they planned to use the money to pay off bills, while 25% will use it to pay off personal loans or credit-card debt.
The figures are broadly similar to when H&R Block did the survey last year.
Frank Brass, H&R Block regional director, told SmartCompany this morning that this is likely because of continuing poor consumer sentiment, which has lagged since the global financial crisis.
“My feeling is it’s a reflection of the times,” he said. “Consumers are hearing a lot of doom and gloom, and their spending reflects that.”
Another factor making Australians thriftier is the raising of the tax-free threshold, which first took effect in the 2012/2013 financial year. Instead of paying tax after the first $6000 of income, Australians now pay no tax if they are earning under $18,200 a year.
“The effect of this is that rather than low-income earners getting a refund at the end of the year, that refund is now there every week in their pay check,” Brass says. “So I’d expect refunds to be slightly lower this year. And because of this change, people have less of an instinctive feel for what their refund will be.”
According to figures released by the ATO, people are lodging their tax returns later this year, which could signal fewer Australians are looking forward to their refund.
Few Australians are planning to spend this year’s refund on any kind of retail. But one silver lining is tourism, with 14% of those surveyed saying they plan to spend some or all of their refund on a holiday.
“A holiday or tourism is an expenditure that people do when they can afford it,” Brass says. “And a tax return helps them do that. If they can’t afford it out of their day-to-day income, their taxes can be a form of forced saving.”