A tax expert has offered some advice on how start-ups can utilise their tax refunds, after a survey revealed more than a third of Australians intend to put their refunds into savings.
H&R Block, Australia’s largest preparer of tax returns, conducted a survey of 3,733 Australian taxpayers, highlighting how they intend to spend their tax refunds.
More than a third (35%) of the taxpayers surveyed intend to put their tax refunds into savings, while 29% will use it to pay bills.
The survey shows 28% of respondents plan to pay off personal loans and credit cards, while 14% will pay off their home loan.
There’s some good news for the tourism industry, with 14% of respondents saying their refund will be used to fund a holiday, but only 5% intend to spend their refund on household appliances.
According to H&R Block regional director Frank Brass, it’s more important than ever to get tax returns in early, given the majority of refunds will be used to pay off debt or will go into savings.
“It means every day you wait is a day of paying interest on debt or not getting paid interest on savings. It is always best to get your money back from the ATO to benefit you as early as possible,” Brass says.
“Past surveys have shown that getting your taxes done is the second most procrastinated decision we make, after visiting the dentist. But it really doesn’t have to be that way.”
“It has never been easier or faster to get your tax refund… A standard tax return [can be completed] in around 45 minutes.”
Brass says there are some key areas start-ups should consider when deciding how to use their tax refund.
“It depends on what the business might need the cash for… Some businesses may be in debt,” Brass says.
“Maybe they have an ATO debt or a supplier debt. They can pay that off… If they have debt [with a supplier], it might be worth quickening up the supplier payments.”
“Others may have equipment they need to buy. They can use it to buy that equipment.”
Of course, Brass says there are always people who will use their refund “for the pokies” or to buy a big screen television for their home.
“Generally, people who are good with their money are good with their money, and people who aren’t, aren’t. It’s not just businesses – it’s individuals as well,” he says.
The news comes after it was revealed the Australian Taxation Office has stopped the tax returns of more than 50,000 people who are suspected of over-claimed or fraudulent tax refunds.
Since July 1, more than 5.45 million individual tax returns have been lodged for the 2011-12 financial year, according to the latest ATO data.
That’s an increase of around 261,000 returns processed in the first two months compared with the same time last year, while the amount of refunds paid so far is up by $40 million.
More than 50,700 of the returns lodged in July and August have been stopped, although 11,000 have been released following cross-checking and the validation of third-party information.
About 6,900 reviews have been completed. Another 32,800 tax returns remain on hold for further review, while compliance action has commenced on about 11,800 returns.