How to Make Better Use of Your Tax Refund
Are you somebody who looks forward to receiving your tax refund from the ATO following the end of each financial year? Some people treat this as a cause for celebration and an opportunity to splurge on that latest flat-screen TV or something similar. Yet it's important to remember that the cheque or deposit that you receive from the ATO is simply a refund of your own money, and the government has been using it to generate interest all year.
In an ideal world, you should ensure that your tax deductions are as accurate as possible so that you don't receive a refund, but this is not always as easy as it may sound. Either way, you should look for ways to reinvest your tax refund to help you plan for the future, rather than buying something in that store. But how can you do this effectively when the general interest rate at the bank is so low?
Better Ideas
You may have heard of fractional ownership and believe that this is simply something for wealthy people. After all, some individuals use this approach to buy part of an aircraft, so they can travel more effectively. However, there are a number of opportunities available to everyone these days that will allow them to invest in a similar fashion, either in property or on the stock exchange.
Stock Market
While your return may give you enough money to buy that flat-screen TV, it may not be enough to enable you to trade on the Australian Stock Exchange by itself. However, you can look at micro-investment platforms that will allow you to set up a small portfolio linked to local or international stocks. Every little bit helps as you put this money to work for you.
Fractional Property
You may also be able to invest in residential property by using the same type of philosophy. You can buy a small part of a particular property and you will earn a corresponding percentage of the rental yield while somebody else does all the management and heavy lifting work. Once again, don't expect this to make you rich overnight, but it is a better way to make use of your tax windfall.
Savings Account
If these approaches seem a little bit too fiddly for you, try to find a high interest savings account that will enable you to grow your money. It can be challenging to find these accounts, especially those that offer you a net yield that is better than inflation, but they are out there.
Fixing Your Return
If you want to have a closer look at your affairs to try and avoid overpaying in the first place, talk with a tax agent to see what they recommend. You may not need to reinvest the money if less is taken from you to begin with. He or she can also answer any questions you may have about the taxation process in general.