7 clever ways to maximise your tax refund

Tax time is here, and for many Australians, that refund from the ATO isn’t just extra cash – it’s a chance to reset, rebuild or get ahead. Whether your refund is a few hundred or a few thousand dollars, there are smarter ways to use it than just letting it sit in your bank account.

Here are seven clever ways to make the most of your 2025 tax refund.

1. Pay down “bad debt” first

Start by tackling any high-interest or non-deductible debt – think credit cards, personal loans, or even buy now, pay later balances. These types of debts cost you more the longer they linger. Using your tax refund to clear or reduce them can instantly improve your financial position and free up cash flow for other goals.

2. Take advantage of term deposit laddering

With interest rates still hovering above historic lows, locking in a solid rate with a term deposit could help grow your refund without market risk. But instead of tying it all up in one term, consider a term deposit laddering strategy. By spreading your money across multiple terms with staggered maturity dates, you get access to cash periodically, while still enjoying the security of fixed returns.

3. Consider innovative micro-investments

Want to dip your toes into investing without overcommitting? Use your tax refund to kickstart a micro-investment portfolio from the touch of a button on your smartphone. App-based share trading platforms allow you to invest in diversified portfolios or ETFs with as little as $5. Your refund could help you build long-term wealth without needing a financial degree.

4. Prepay eligible expenses to reduce next year’s tax

If you're self-employed, freelance or run a side hustle, your tax refund could help you prepay deductible expenses for the next financial year. That includes business subscriptions, insurance, marketing or equipment costs. Prepaying now could reduce your taxable income next year, giving you another potential refund down the line.

5. Fund a course to upskill or pivot

Invest in yourself! Whether it’s a micro-credential, short course or full certificate, education that helps you earn more or shift into a new industry can be money well spent. Bonus? Many upskilling expenses may be tax-deductible if they’re tied to your current job or income stream.

6. Claim the first-mover advantage on green upgrades

With more government rebates and energy incentives rolling out across the country, now’s a great time to invest in energy-efficient home upgrades. Use your refund as a deposit on solar panels, a heat pump or insulation – and potentially lower your energy bills long-term. Check your state’s rebates or federal green incentives to stretch your refund even further.

7. Maximise your super with the new $30k cap

The concessional (tax-deductible) super contribution cap has increased to $30,000 for the 2024/25 financial year, up from $27,500. This provides an opportunity to make additional contributions to your superannuation, potentially reducing your taxable income and boosting your retirement savings. For instance, a $2,500 personal contribution could reduce your taxable income and result in approximately $425 back at tax time if you're on a 30% marginal tax rate.

There’s no one-size-fits-all approach when it comes to your tax refund – but there are smarter ways to use it. Whether it’s tackling debt, growing savings or investing in your future, how you spend your refund today can shape your financial wellbeing tomorrow.