Savings plans and slashing debt soar among Aussies, new research shows
Australians are battening down their financial hatches, the annual tax refund survey from homeloans.com.au has found. This year, more tax refund dollars will be spent to reduce credit card debt and mortgages, not to mention bolster savings, than anything else.
Click here to view the Homeloans.com.au’s 2016 Tax Refund Survey report.
“It appears Australians have increasingly conservative plans for their tax refunds this year,” says Will Keall, homeloans.com.au’s national marketing manager. “Our annual survey examines Australians’ expectations and behaviour regarding their annual tax returns – and there’s consistently a clear trend towards debt reduction and savings. And in 2016 it seems even more people are being cautious with their money and choosing to reduce personal and household debt.”
This year two in three respondents expect to receive a tax refund, which is down on 2015, when nearly three quarters expected a refund. And as revealed in previous years’ surveys, reducing / eliminating debt is key.
More than a quarter of the 2016 survey respondents plan to put their tax refund on their mortgage (26%, up from 21% in 2014), while 38% will pay down other debt such as credit cards (compared with 33% in 2014). Also up is the percentage of those who plan to invest or save the money (from 21% last year to 30% this year). And those who expect to receive a tax refund are choosing to wisely pay off debt rather than use their tax refund to splash out on a holiday (it’s down by 18% compared with the 2015 survey), or renovate their home (30% decrease).
Interestingly, those aged over 45 seem set to put their refunds towards a holiday (almost one in four), compared with 11% of those between 25 and 44.
Fewer refunds, but higher amounts expected
The survey also showed that while fewer people are expecting a tax refund this year, they are more optimistic about the amount.
“There’s a continuing trend that people are expecting larger tax refunds,” Keall says. “And the optimism is certainly evident among the younger age groups. For those aged under 25, the figure was 45% that are expecting a bigger refund, while for those aged over 25, it was more than a quarter.
DIY on the rise
Accountants and registered tax agents can continue to rest easy in terms of popularity (at this time of year at least). There is a trend towards people doing their own tax returns – up from 31% in 2014 to 35% this year. But the majority (57%) still use a registered tax agent or accountant. However, there was a distinct difference in trends between the under 35s and over 35s. Almost two thirds of respondents over the age of 35 opted to have a professional prepare their return, while more than half of the younger cohort planned to complete their own returns or have a partner, other family member or friend do it for them.
Those who are more likely to use an expert to do their tax refund are the self employed (88% compared with 54% for the other segments).
Other findings of the Homeloans survey included:
- Shopping sprees and cars accounted for less than 4% of respondents’ plans for refunds – down on last year’s 4.9%.
- Buying investment properties was a priority for just 2.5% of respondents compared to 4.4% in 2015.
- The number of respondents who planned to use their refunds for a holiday dropped from 21% to 16.5%, as did those planning renovations (19% to 13%).
- Younger respondents are more likely than other age groups to put their refund towards a home deposit (14% compared with 3%), while 34% plan to spend it on a holiday, while 48% of respondents said they’ll invest/save the money.
- Unemployed respondents are even more likely to focus on debt reduction (67%).
About Homeloans Ltd – www.homeloans.com.au
Founded in 1985 and listed on the Australian Stock Exchange in 2001, Homeloans Ltd (ASX:HOM) specialises in home loans, and has a wide range of products to meet the needs of all types of customers, from first home buyers to investors.
With an Australia-wide presence, Homeloans provides a refreshing alternative to the banks for home finance. The mortgage provider has a clear focus on customer service, and has won a number of industry accolades including the Mortgage and Finance Association of Australia (MFAA) Mortgage Manager of the Year Excellence Award 2009, 2010 and 2012, and Best Non-Bank Lender at the 2011 Australian Lending Awards. Homeloans offers a generous customer benefits program and is proud to support Carbon Conscious, planting a tree for every Homeloans loan settled.
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