Responsible Things To Do With Your Tax Refund
The end of the financial year is upon us. As we all scramble to sort out our taxes and expenses for tax time, it’s easy to be swayed by some of the massive EOFY deals that pop up around about now to try and detach us from our hard earned tax returns. It’s a cliche to buy something fun, like a brand new 4K TV with your cash injection, but there are far more responsible ways that you can spend that money.
The items below are admittedly not the flashiest ways to spend your newfound cash, but they are definitely the safest things that you can do for yours and your family’s future. We’ve compiled a few of the most responsible things to do with your tax refund, so you can kick off the 2023 financial year in the right direction.
Make Big Work Related Purchases
Big-ticket work expenses like computers, tools and software are things that inevitably need to be replaced. In the Australian taxation system, work related items that cost you more than A$300 need to be depreciated over the “effective life” of the item. If you buy these items at the end of a financial year, the benefit on your next tax return will be very small. However, a trick that any accountant will tell you is that if you buy the item early in the year – July or August – that depreciation assessment will cover more time and this causes a bigger deduction on your next tax return.
Audit Your Internet Security
Regularly auditing your tech’s security is the best way to make sure you’re protected. As a work-related expense, a new financial year is the perfect time to get that done and put yourself on an annual security cycle. Whether you work from home or not, chances are you’re going to access some sensitive data on your personal devices. A holistic internet security suite such as PCMag Editors’ Choice Bitdefender Total Security is the simplest way to ensure all your bases are covered when it comes to the online safety of your household. It provides top of the line threat detection with minimal impact on your system’s performance, with some great features like camera/microphone security and an included VPN with a 200MB data allowance per day/device for safe browsing.
An important factor to consider as well is if your family/housemates have brought any new devices onto your network this past year. If this is the case, it could be worth combining into a multi-device bundle like Bitdefender’s Family Pack. While a jump up in price from just a personal protection plan, if you work from home (even only part time or out-of-hours), security suite and antivirus subscriptions can count as work-related expenses, even if it’s only a percentage of the cost proportional to the amount of work you do at home. If you do your own Australian tax returns, these subscriptions would fall under “other work related deductions”.
Pay Off Outstanding Debts
If you have a large credit card debt or personal loan that doesn’t seem to be going away, consider using your tax refund to lower these debts or (if you can) fully pay it off. Once you’re debt free, you can finally start using your money for you, rather than contributing to a big bank’s profits. It might mean that next financial year you don’t have to be so responsible with your tax refund and you can make some more purchases of personal items guilt-free. Alternatively, if you want to keep up the good work and form good habits, you can do the one thing all responsible people do with their disposable income…
We know, it’s not what you want to hear. There’s nothing satisfying about putting that money aside after the efforts you put in to correctly file your taxes and after watching your salary be taxed month over month. However it was Einstein who (allegedly) once claimed that the greatest force in the world is “compound interest”. Put that money into a savings account, or a low-risk investment, and thank yourself years in the future for your restraint.