Tax return tips to budget your refund

Before you lock in what to buy with your tax return this year, here's a few tax return budgeting tips to consider.

Tax Return Tips

As EOFY approaches, you may be planning what to buy with your tax return if you receive a refund. We’re in an economic environment of rising interest rates and money is tighter this year for many Australians. The stakes may feel higher for your financial decisions.

The average tax refund in Australia in 2021 was over $2,9301, though your own refund will vary depending on your income, expenses, and deductions. This amount of money can have a big impact on your finances if you use it wisely and tax-time is a great trigger to review your budget.

How to budget your tax return

Getting a lump sum of money can be a great chance to pay off some debt or save more money. One way to budget your tax return would be to split it into three; some for debt, some for saving and some for spending.

Reduce your home loan

Let’s say you have home loan with a $400,000 balance, 5.50%p.a. interest rate, and you are in the third year of a 30-year mortgage.

A one-off $1,500 lump sum repayment could save you over $5,071 in interest over the life of your loan and would end your loan term two months earlier2.  That’s value for money!

Keep in mind this is an estimate and does not factor in interest rate changes or any costs for lump sum payments or paying your loan out early. Use our Extra Repayment Calculator to calculate your own home loan.

Pay off your credit card

According to, the average Australian credit card debt in Australia in March 2023 was $2,991 and the average credit card interest rate is 19.94%. In this situation, it would take over 33 years to pay off your credit card3 if you only paid the minimum repayment each month.

No one wants to spend 33 years paying off a credit card! If you aren’t paying your credit card down each month, consider doing a lump-sum deposit with your tax refund. You could also make higher monthly repayments or a balance transfer.

Save it

Consider stashing your tax refund in a high interest savings account or a term deposit. Saving some of your refund will give you the reassurance of having a nest egg for the unexpected, plus an extra boost of interest to keep you motivated. Use our Savings Calculator to estimate how much interest you could earn.

What to buy with your tax return

Let's be honest, using your tax refund for a little treat is a great way to reward yourself for all your hard work throughout the year. But where is your money best spent? In the end it will be up to you, but here are some ideas!

Buy local and support small business

Since the 2020 pandemic, supporting local business has become more important and easier than ever. Local stores, whether you shop online or face-to-face, can often have unique and creative products and a personal touch that you may not be able to find elsewhere. It’s easy to find new small businesses through social media and dedicated websites like Etsy.

Plus, you get the warm and fuzzies, knowing you’re contributing back into your local community through your purchase.

Buy something that will bring you long term value

This doesn’t have to be an investment in shares or a rare collectible. Value is personal.

Value can come from how long an item lasts, the positive impact it has on your life and the enjoyment you get from it. The goal here is to spend the money once, so you don’t have to spend it again. This ‘item of value’ may even help reduce your overall cost of living.

Some ideas include:

  • A piece of solid furniture that you know will stand the test of time
  • A home technology item or appliance that has added warranty and assurance
  • A home improvement such as solar panels or a veggie garden.

Buy an experience

Consider using some of your tax refund to buy an experience and spend time with your loved ones. There are heaps of experiences that will create lasting memories and won’t use up your tax refund in one hit! Ideas include a road trip to a local attraction, a picnic in the park or dinner with a show.

No matter what you choose to buy with your tax refund, shopping with your Heritage Visa debit or credit card makes it easy.

Get started

Remember, preparing in advance can be a great way to take tough decisions out of financial choices and help reduce money stress. Ready to get saving? We’re here to help. Learn more about our savings accounts online, call us 24/7 on 13 14 22 or visit your local branch.

1. According to the Commissioner of Taxation Annual Report 2021-22 based on $41.9 billion in refunds issued in 2021, divided by 14.3 million individual current-year tax returns.

2. Savings of $5,071 calculated using the Heritage Bank Extra Repayment Calculator with amount of borrowing $400,000, loan term of 30 years and lump sum payment of $1,500 in made in year 3 of the loan.

3. Timing of 33 years and 6 months calculated using the Money Smart Credit Card Calculator with amount owing of $2,991 and interest rate of 19.94%p.a.

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