Each year, more than 14 million Australians lodge a tax return. Around two-thirds receive a refund. In 2022 self-preparers received an average refund of $2,576 ¹. That’s not small change. With the right approach, your refund can work harder for you.
Here are five smart ways to make the most of your tax refund.
Grow it in a savings account or term deposit
If you don’t need your refund immediately, consider putting it into an interest bearing savings account or term deposit. Both options offer a safe way to grow your money without the temptation to spend it.
Term deposits give you a competitive interest rate in return for locking your funds away for a set period. With an Elders Finance term deposit, you can start with as little as $500 and choose if you want interest paid on maturity, or monthly (on anniversary).
Savings accounts give you flexibility to keep adding to your account and access your funds if needed. Some, like the Elders Bonus Plus Saver, give you a bonus rate of interest if you make at least one deposit, and no withdrawals in a month.
Pay down your debts
Reducing debt can be one of the most effective ways to use a tax refund.
For example, if you have a $500,000 home loan, paid monthly over 30 years at 6 per cent per annum, depositing an extra $3,000 from your refund could save you $12,858 in interest over the life of the loan2. That’s money back in your pocket, simply by getting ahead.
The same principle applies for credit cards and personal loans (subject to the conditions of the loan). Use our extra repayment calculator to see how much you could benefit.
Invest in work-related items or study
If you’ve been putting off buying tools, equipment, or upgrading your skills, your tax refund could be the boost you need.
By purchasing work-related items now, rather than waiting until the end of financial year, you can maximise potential deductions for the 2025/26 financial year. This can be especially beneficial if you’re aiming to increase your earning potential or your business needs some new assets.
Did you know we do business loans?
Boost your superannuation
While contributing to your superannuation means locking away your money until retirement, the power of compounding means the earlier you invest, the more it can grow over time. Even a small, one-off contribution from your tax refund can have a big impact on your future balance, and potentially reduce your taxable income in the year you make the contribution.
Invest in home improvements
We’re not talking Darryl Kerrigan-style extensions, but simple updates like a fresh coat of paint, new tiles in the bathroom, or improved landscaping can quickly add value to your property. Once the improvements are done, arrange to have your property reappraised and consider a mortgage health check. You may be able to negotiate a better interest rate - saving you even more over time.
The bottom line
Your tax refund is a valuable opportunity to strengthen your financial position, whether that’s by growing your savings, reducing debt, boosting your earning potential, or adding value to your home. Making a considered choice now can deliver benefits well beyond this year’s return.
References:
1. H& R Block
2. Note: The information provided by the calculator is intended to provide illustrative examples based on stated assumptions and your inputs. Calculations are meant as estimates only and it is advised that you consult with a mortgage broker about your specific circumstances. Financial Calculators © VisionAbacus Pty Ltd 2025
Disclaimer: This information is general in nature and does not consider your personal objectives, financial situation or needs. Always seek professional financial or tax advice before making decisions.
Brokerage services provided by Elders Home Loans Pty Limited (ABN 22 118 064 654; Australian Credit Licence 384408) or its authorised credit representatives; or by Elders Asset Finance Pty Limited (ABN 39 670 506 617; Credit Representative Number 558452) as authorised credit representative of LMG Broker Services Pty Limited (Australian Credit Licence 517192). Lending criteria apply. Not all products of all lenders may be offered.