Australians are being encouraged to lodge their tax returns on time to avoid a hefty fine. In most cases, workers are greeted with a refund for their efforts.
Australians are being encouraged to lodge their tax returns on time to avoid a hefty fine. In most cases, workers are greeted with a refund for their efforts.

Get on top of your tax and reap the rewards

AS the deadline for filing tax returns fast approaches, new data would suggest many Australians are yet to complete the task.

According to data from the Australian Tax Office, approximately 20 per cent of Australians fail to lodge their tax return before the October 31 deadline.

 Mortgage Choice franchise owner Julian Collins said while filing a tax return can seem like a daunting and time consuming chore, it is important for Australians to meet their tax deadline lest they face a hefty fine.

"Those who don't complete their tax return on time can incur a penalty of $850 plus interest," Mr Collins said.

"Meanwhile, those who do complete their tax return on time not only avoid being fined, but are often rewarded with a nice tax refund."

For those who do receive a tax refund, Mr Collins said it was important to invest the money wisely. Some suggestions on making good use of the money include:

Add to your home loan deposit: With banks aggressively competing for owner occupied business, there's never been a better time to apply for a home loan.

Target high interest debt: According to Mortgage Choice's 2015 Money Survey, more than 50% of Australians have some form of credit card debt. Of those with credit card debt, more than 33% are saddled with more than $5000 worth of debt. Worse still, a lot of people with credit card debt tend to only make the minimum repayments each month.

Start or increase your emergency fund: Life is full of surprises, some more expensive than others. As such, it is always a good idea to have an emergency fund. You can use any money you receive from your tax return to either start or build an emergency fund.

Top up your mortgage: For those with a mortgage, your tax return can provide you with the perfect opportunity to make an additional payment.

Inject it into super: If you don't have a mortgage, another great way to spend your tax refund is by injecting it into your super.

This will help you to grow your nest egg, which will help you tremendously in retirement.