How should you spend your tax refund?

2016-11-04 06:10

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Tax season is in full swing with the 25 November deadline for regular, individual taxpayers almost here. In addition to your legal obligation to do so, one of the most compelling reasons to file your tax return is because you might have overpaid or overestimated your taxes and the South African Revenue Services (SARS) might be paying you back some extra cash.

This is especially true for those who did not work for the entire tax year, changed jobs during the period, received allowances, contributed to medical aid and / or retirement funds or earned income from commission, rental income, as independent contractors or from running a business as a sole proprietor in a personal capacity.

This unbudgeted income will mean extra cash in your pockets and the options on how to spend it are endless.

Here’s a list of what you could spend your tax refund on – whether you are looking to spend it sensibly, or on your family, on a splurge, or on your next adventure!

Sensible choices 

For those who want to use their tax refund in a smart and sensible way there are numerous options that your bank account, debt and financial advisor will applaud you for:

  • Pay off your debts – Your tax refund can be used to reduce your debts – especially those that have high interest rates like store accounts, credit cards or personal loans. Any contributions towards the main sum will help to bring down your outstanding balance and reduce your interest.
  • Put it in a savings account – Making a sacrifice in order to gain a larger goal is why you should use your tax refund to contribute towards your savings. You do not know when hard times will strike and it is always healthy to have a good cash flow in case of emergencies or perhaps so that you can save up for something big like an overseas vacation or for a new house or car.
  • Start up your dream business – The biggest problem when creating your own small business is having enough capital to get your business off the ground. Using your tax refund as your seed capital will ensure that you will have income for months to come.

Splurge choices

Extra cash means extra spending, and you finally have enough money to buy or do what you’ve had your eye on for ages. Here are some ideas about what you can spoil yourself a little and splurge your tax refund on:

  • Go on vacation – Tax season can be a stressful time of the year and nothing helps you relax better than a good holiday. With your taxes filed and your refund in your pocket why not escape the Christmas crowds and treat yourself or your family on a much needed vacation.
  • Have a pamper day – Who doesn’t love the luxurious indulgence of a spa day? Treat yourself to a massage, a manicure, and pedicure and allow yourself (as well as your friend or partner) to be spoilt rotten.
  • Renovate your home – Always wanted to build that walk-in closet or a games room where you can entertain your friends, but did not have enough money? House renovations are not only a great investment and can add value to your home but can create more space and better living space for you and your family.

Family choices

With extra cash in hand why not spoil the family, treat the kids or your special partner? Here are some ideas:

  • Pay for your children’s education – Whether it is paying their current school fees, paying for their extracurricular activities or saving up for when they attend high school or a tertiary institution. It is a good thing to invest in their future.
  • Build up a trust fund for your child – It is never too early to start thinking about the future, especially for your child. Use your tax refund to build up a healthy savings for your child that they can use in the future for studies, a first car or to pursue a dream.
  • Buy something recreational for the whole family – Whether it may be building a pool, sporting equipment, a pool table or a gaming device, why not use your tax refund on something the whole family will love and enjoy.

Adventurous choices

If your adrenalin levels are itching for an adventure, there is no better time to indulge in your interests than when you have extra cash from your tax refund.

  • Go skydiving – See the beauty of South Africa from above. Use your tax refund to do something thrilling and exciting and become part of the community of South African skydivers. It is a priceless experience.
  • Try out standup paddle boarding – A sport that has become popular recently and will continue to gain traction during summer has been standup paddle boarding. Use your tax refund to invest in some equipment and join in the new sporting craze that will get you outdoors and healthy.
  • Take a road trip to highest bungee jumping point in SA – Take your family, friends, or partner on a fun road trip to Bloukrans Bridge Bungy in the Tsitsikamma area of the Eastern Cape. And have the ultimate adventurous holiday.

Creative choices

For those who tend to be more on the arty side, there are options for you to participate in your hobby or tune your talent; here are some ways for you to  spend your tax refund:

  • Take a class – Whether you wish to learn more about your art, or practice your techniques, there are various classes and schools you can attend for cooking, drawing, painting, sewing or even languages. The tuition might be pricey but it’s an excellent option to use your extra “bonus’’ cash on.
  • Build your own sanctuary – It might be a studio for your art, a writing space, or a Zen garden, you can use your tax refund to make a space in your home or garden just for you to pursue your craft or find your inner peace.
  • Buy season tickets to the theatre and the ballet – If you feel as if you need that extra dose of culture, why not use your tax refund to buy season tickets for the theatre or ballet company of your choice and make sure that you don’t miss out on any of their performances?

Want to get the most of your tax return but unsure of how to do it? Filing your taxes can be complicated and many people struggle with understanding what needs to be declared, how and where. TaxTim is here to help by offering the ease of online filing (in your own time) with the assistance of a tax expert named ‘Tim’! This incredibly useful website is your own digital tax assistant that helps you complete your tax return quickly, easily and correctly, by guiding you step-by-step through a series of questions in plain English. TaxTim is specifically designed to uncover all your available tax deductions, which helps to reduce your tax liability and maximise any refund due to you. Get handy how-to’s, convenient tax calculators and answers to any tricky tax questions too. Register now and file your tax return before the 25 November deadline: www.taxtim.com

Read more on:    taxtim  |  sars  |  tax returns  |  tax
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