How good does it feel when you get a big tax return at the end of the financial year? All this money just gives you the urge to splurge, whether that be on a nice night out, a fancy purchase you’ve had your eye on, or a promising investment. But before you get ahead of yourself, it’s good to step back and consider the most effective way to use it—like paying off a small loan. Learn our smart ways to spend your tax refund below!
Overview:
- Pay off any pressing debts and loans
- Upgrade your necessities
- Fix your car
- Build up your rainy-day fund
- Buy important work equipment
- Invest in yourself
- Take a holiday
Best ways to use your tax refund
1. Pay off any pressing debts and loans
If you have credit card debt or a cash loan, using your tax return to pay part (or all) of it off should be one of your priorities.
Even if you apply some of your tax return to an existing loan while not fully paying it off, having a lower overall balance will ensure that interest payments are minimised as much as possible. Sorting out your debts is one of the smartest ways to spend your tax refund. You’ll be able to relax a bit more for the rest of the year!
2. Upgrade your necessities
Upgrading our kitchen, laundry, or technological appliances is one of the things we love to put off. But maybe your ancient TV has those annoying dead pixels in the corner. Or your dishwasher has an ever-growing puddle. Or your noisy fridge is causing your food to spoil quickly!
Little do you know, you could save more by upgrading. When you buy an energy efficient appliance, it could save you money in the long run. A lot of older models are already less efficient than modern appliances, and issues like leaks or worn out components can cause your water or power bills to soar. This guide can help you choose the best model for your household.
IF you’re not sure what to buy with your tax refund, here are some appliances to consider upgrading:
- Fridge
- Washing machine
- Air conditioner
- Clothes dryer
- Dishwasher
- Televisions and computer monitors
3. Fix your car
That old part you’ve been putting off replacing? The sound that just won’t go away? The broken aircon making you dread summer? Your tax return could be the solution to them all! Even if you’re not using it to commute to work, a car is important to most people’s lifestyle and freedom. We all try our best to keep our vehicles reliable, but sometimes that extra service or a new part just doesn’t fit into the budget.
But tax time means you should have a chunk of change to cover it. If you need to completely replace your old ride, you can put that money towards buying a used car.
4. Build up your rainy-day fund
With life throwing all sorts of unexpected financial situations at us, an emergency fund should be part of your personal finance plan. With enough of a monetary reserve, you can manage surprises such as car repairs, large bills, or even simple day-to-day food bills. If you don’t know what to do with tax return money, you don’t have to spend it for the sake of it. So, before you go on a shopping spree, a smart way to spend your tax refund is not to spend it at all! Consider putting it into your savings instead this year.
5. Buy important work equipment
Although EOFY is over, it’s never too late to start thinking about the next one. A smart way to spend your tax refund is to reinvest in your work. Especially if you’re a tradie that needs expensive tools, or a work-from-home employee that needs to update your home office, these purchases will give you a better deduction next financial year!
Not sure what things to invest in? Depending on your occupation, you could claim things like:
- New laptop, PC, or computer accessories
- Power tools
- Office equipment such as printers and furniture
- Uniforms and work boots
- Shelving and storage
If the item costs less than $300, you can claim the whole amount on next year’s tax. If it was more than $300, you can claim depreciation (loss of value).* Buying work equipment with your tax return makes sense, just make sure you keep your receipts!
*Note that the proposed $1,000 standard tax deduction may change this, which affects the 2026-27 tax return (lodgements from July 2027).
6. Invest in yourself
Another smart way to spend your tax refund is to literally get smarter! If you’ve been wanting to start or change careers, or upskill, now is the time! That can mean a truck licence, a barista course, or a TAFE certificate or diploma. Education and training can be expensive, so take the opportunity!
Think about what you want to achieve and invest the time and money into making it happen. Not sure what you would like to study? Try this questionnaire from Open Universities.
Investing in yourself doesn’t have to mean certificates and licences, but fun or personal courses and classes such as:
- Scuba diving course
- Sommelier course
- Language lessons
- Dance classes
- Painting classes
7. Take a holiday
While paying off debts or putting the money into savings is a smart way to spend your tax return, taking a break is just as valid.
A study from the National Library of Medicine showed that a short vacation of four nights away from home showed positive and lasting effects on recovery, well-being and strain. On top of the benefits to yourself, you’re also supporting our local tourism industry. So, when considering how to spend your tax refund, consider a bit of time off work as a good investment.
Just be conscious of how much you spend on holiday. There are plenty of cheap places to travel to!
This year’s tax return not enough?
If you’re like many other Australians, you might not have received as large a tax return as you anticipated. If you need a little help, Swoosh offers highly flexible small loans delivered to you quickly. Apply now!
Smart ways to spend your tax refund FAQs
What is the smartest thing to do with a tax refund?
The smartest thing to do with a tax refund is to spend it in a way that benefits you in the long run. This could be paying off a debt/loan, upgrading your necessities, or adding it to your savings. It ultimately depends on your circumstances, but just make sure you think carefully before going on a shopping trip.
What is the $1000 instant tax reduction?
In April 2026, the Federal Government proposed a $1,000 instant tax deduction to come into effect in the 2026-27 tax return. This is not a cash tax refund, but rather a tax deduction you can claim for work-related expenses with no receipt.
How can I maximise my refund?
There are a number of ways you can maximise your tax return. Here are some examples:
- Claim as many work-related expenses as you can (e.g. tools and work-specific clothing, laptops and phones, courses and conferences)
- Claim deductions for working at home
- Get help from a tax agent (you can claim it on next year’s return)
What can I spend my income tax on?
You can spend your income tax return on anything! But we recommend using it wisely rather than frivolously, such as investing in your super, upgrading your skills or buying something essential (like a car).
