Submitting your tax return might seem like a chore, but for many Australian taxpayers, it could mean a substantial tax refund.

There are smart ways to use that refund to help secure your financial situation. Here are some ideas to get you thinking about how you could spend or invest that refund.

1. Pay off debt

Australian Bureau of Statistics data shows that a large percentage of Australian households hold some form of debt. It might be a personal loan, credit card debt or a mortgage (or a combination of all).

More than a quarter of this percentage had total debt that was 3 or more times their annualised disposable income.

Using your tax refund to pay off even some of your debts can help you manage your money effectively.

2. Top up your savings

If you’re unsure what to do straight away with any windfall, putting your tax refund into a savings account until you do decide can be a smart move.

Some accounts give you bonus interest for the first few months, which will top up that initial amount that the tax office sent you. You can access your money once you’ve decided how you’d like to spend it.

term deposit can be another practical place to park your cash. Because you won’t be able to access it for a set amount of time, the temptation to spend it straight away is removed, but in the meantime it can be gaining some good interest while you decide what you want to use it for.

3. Top up your superannuation

You may increase your super by adding a personal contribution either to your own super fund or to your spouse’s fund.

This is money that is in addition to any compulsory super contributions your employer makes on your behalf or anything you add through any salary sacrifice arrangement you may have.

Making after-tax contributions is a simple way to add to your super, and if you can spare the money, you can really boost your superannuation savings.

Please note caps apply to contributions made to your super in any tax year. These caps can depend on your age and whether you contribute before or after tax so to make sure you don't exceed these caps. Before making any decisions about your super, you should seek independent professional financial and tax advice.

Find out more information from the ATO.

4. Invest in some shares

There are more than 2,000 companies listed on the Australian Securities Exchange (ASX) – you may be wary of putting it all into just one stock. But there are ways to diversify your share investments and therefore help mitigate some of the risk of market volatility.

An exchange traded fund (ETF) can give you more diversity across various markets. ETFs are listed on a stock exchange, with units in an ETF available to be bought and sold like shares through a broker, providing access to specific regions or countries as well as particular investment themes (e.g. real estate).

ETFs offer a relatively low-cost entry method into markets that might otherwise be difficult to access, and can provide diversity, transparency and liquidity to assist in mitigating risk, particularly when markets are volatile.

5. Add value to your home

Renovating can add value to your property as well as make your house or apartment feel more like a home. Just make sure you check for any local council guidelines regulations before you start renovating.

Be aware, too, that just like any other investment, property markets aren’t always guaranteed to rise. Overcapitalising when renovating or focusing on the wrong areas can be easy mistakes to make.

Stick to a budget and don’t try to do too much too quickly with only a limited amount of funds. Even painting just one room can freshen things up for the new financial year.

Things you should know

  • This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.