Where to park your tax refund to get the best bang for your buck

Where to park your tax refund to get the best bang for your buck

The air is getting cooler and the sun is setting earlier. We all know what that means – it’s almost tax time!

If you’re one of the lucky Australians who’ll be getting a tax refund this year, you have a few places that you can deposit your dollars. But’s up to you and your financial needs to choose the most competitive option.

1. Put it in a high interest savings account

With virtually no-risk – putting your money into a high interest savings account can very easily help you grow your money over time.

According to RateCity research, there are savings accounts with rates as high as 3 per cent available. For most accounts, the maximum rate is only available if you follow the account conditions, such as making regular deposits into the account or not withdrawing funds. Otherwise your savings account can revert to a lower base rate.

This means that if you had a tax refund of, say, $1,500 and continued to make regular monthly deposits of $200 into a savings account accruing interest monthly, in 5 years you would have saved $14,672. This would make the total interest earned $1,172.

If you didn’t make regular deposits, however, you can still grow your savings. For example, if you took that same $1,500 tax refund and put it in a savings account with a base rate of 1.81 per cent accrued monthly, in 5 years you would have $1,642 – interest earned of $142.

As you can see, savings accounts can be an effective place to put your tax refund – if you continue to make regular deposits and earn the account’s max rate.

Major banks

Base rate

Max rate

Interest earned per month on






Monthly deposit of $200, no withdraw





Monthly deposit, account balance must have increased





Monthly deposit, no withdraw





Min monthly deposit of $10, no withdraw

Market leaders

Bank of Queensland




Monthly deposit of $1k





Monthly deposit of $200

ME Bank




Use linked trans account weekly





Monthly deposit of $1K

Rates accurate as at 9/05/2019

2. Turn to a term deposit

Term deposits are similar to savings accounts, however unlike the former you are locking away your deposit and are unable to access those funds for a set period of time.

These are also a low risk option, as a fixed rate means you’ll know exactly how much interest your money will accumulate regardless of changes in the market.

For example, if you took that same $1,500 and put it in a high rate 5-year term deposit earning 3 per cent, at the end of the fixed term you will have $1,725.

If you’re the kind of person who is prone to dip into your savings or not make regular deposit, a term deposit can be a competitive option.

Major banks

1-year rate

3-year rate

5-year rate

















Market Leaders

Australian Unity




Qudos Bank



Bank Australia



Rates accurate as at 9/05/2019

3. Pay off your credit card debt

When you receive a tax refund your first instinct can often be to spend, spend, spend. But what if you want to get on top of one or more debts?

Credit cards typically have higher interest rates than other debt sources, such as home loans or personal loans, which means that they can very easy get out of control if you’re not paying it down when you can.

If you’ve been slowly growing a credit card debt, it’s a good idea to try and get on top of it whenever you find yourself with a little more money thank you expected.

If you have a $5,000 credit card bill and are only making minimum repayments at 18 per cent, you can expect to pay $17,181 in total over 33 years. If you continue to only make minimum repayments but take $1,500 off your debt from your tax refund, you’ll shave 6 years off this time frame.

What if I have more than one source of debt?

If you’re wondering which of your debts to pay off first, the answer is simple – it’s generally best to choose whichever has the highest interest rate. It’s often a mistake to pay of the biggest debt first, such as your home loan, as something like a credit card will typically have a much higher interest rate and therefore a higher chance of causing your debt to grow out of your financial control. 

4. That being said… put it into your mortgage

If your home loan allows for lump sum payments, you could also consider putting your tax refund into your mortgage.

Making additional one-off payments can help you to reduce the cost of your loan, shave off some of the interest owed and also help you to repay the loan back quicker.

If you have a $500,000 home loan that you’re paying off over 30 years at an interest rate of 4 per cent, making a one-off lump sum payment of $1,500 from your tax refund will amount to $2,579 saved in interest over the life of your loan.

This means your $1,500 lump sum payment has grown into additional saving of $1,079 off of your home loan.  

Keep in mind that if your home loan has a fixed interest rate, you may not be able to make any lump sum or extra repayments without copping fees. Some other mortgages may also have a limit on the amount you can pay in additional repayments.

5. Donate it to charity

If you don’t measure your returns in monetary value, you could always donate your tax refund to the charity of your choice.

Charity comparison websites, such as ChangePath, are helpful resources to find not-for-profit that best meet your needs, as well as grade their transparency and financial sustainability.

And if you are so financially inclined – keep in mind that you can always claim tax on that charitable donation next year!

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Learn more about bank accounts

Can Centrelink access your bank account?

Yes, Centrelink can access your bank account, but only if you give them a reason to. Centrelink uses data-matching software with other federal government agencies to help it crack down on welfare cheats.

This is why it’s important to give true and matching information to all government agencies.

For example, if you report to Centrelink your annual income is $25,000, but at tax time you report your income as $50,000 with the ATO, it’s likely you’ll be ‘red flagged’.

At this point, Centrelink can legally request that your bank hand over your personal bank account details, to review your finances.

In most cases, Centrelink does not have the authority to take money out of your account. You will usually be given written notice to repay the debt.

However, Centrelink can also reduce your benefits until you’ve paid back what you owe. In extreme cases, Centrelink can garnish your wages and assets (including money in your bank account) until your debt is repaid.

How do I close a bank account?

Closing a bank account is one of those tasks that’s easy to put in the too-hard basket. There are quite a few steps involved, some which may require you to hang on the phone for a while.  

Here’s a handy checklist of items to tick off, so the job gets done quicker. If you don’t do your banking online, the following steps can also be done at a branch.   

  • Cancel any scheduled or recurring payments
  • Update your direct debit details (such as loan repayments) with creditors
  • Export your payee address book (to keep a record of saved third-party bank account details)
  • Transfer the balance of your account (to the new bank account)
  • Close your account online, or by calling the bank or visiting a branch

How do I open a bank account for a baby?

If you’ve just welcome a new baby into the world, congratulations. Opening a bank account for your child can be a wonderful first gift.

Before you can open your child an account, you’ll need to have a birth certificate or passport for your baby.

As the parent or guardian, you’ll also be listed as a joint holder on the account. This means you’ll need to have proof of your identification and address (a driver’s licence, passport, birth certificate or Medicare Card).

Many banks and credit unions offer baby banks accounts. Usually, you can apply online; otherwise you can head into a local branch or office with your documents.

How do I open a new bank account?

There are a number of ways to open a new bank account – online, over the phone or in the branch. The trick is to decide what type of bank account you want beforehand.

It might sound like a simple enough task, but there are literally hundreds of bank accounts to choose from. And each offer their own banking features and benefits.

A comparison site like RateCity can help you work out what bank account product matches your needs.

Once you’ve made up your mind what you want, it’s advisable to have the following information ready for the application process.

  • A couple of forms of identification (such as driver’s licence, Medicare card, passport)
  • Tax file number
  • Residential address, contact phone number and email (though email is not essential)

How do I open a bank account if I'm under 18?

The good news for savvy young folks like you wanting to take charge of your finances is that there are many bank accounts available for under-18s.

For bank accounts that require you to be 18 or older, you’ll have to rope in a parent or guardian to open the account for you.

Otherwise, you can apply by yourself online or at the branch of the bank, credit union or building society that has the account you would like to open. 

If applying online, you might be asked for a form of identification. For under-18s, this could be a Medicare card you’re listed on, your birth certificate and/or your current home address.

In most cases, you can verify your identity online (at the time of applying) or at the branch afterwards.

Do I need to open a business bank account?

Just because you’re in business doesn’t necessarily mean you need a business bank account. You could be a sole trader not registered for GST, and use your personal bank account for business.

If you do want a business account, there are plenty of benefits attached to business transaction and savings accounts, as well as business term deposits.

There are business bank accounts designed for businesses with a high volume of transactions, and those for start-ups with a small amount of trade. You could also include an EFTPOS service with your account.

Some business bank accounts charge for the number of transactions per month, while others offer a pay-as-you-go fee structure, where you only pay fees for transactions you make.

It’s up to you whether your priority is mainly transactions, or earning the maximum amount of interest on your principal. There’s a business banking solution for you if you need one.

Can you deposit money into somebody else's bank account?

One of the easiest banking tasks in the world is depositing money. You can even deposit money into someone else’s bank account if you wish.

The basic information you need to deposit money into a third-party bank account is:

  • Payee’s name
  • Bank, building society or credit union (though this isn’t necessary)
  • BSB (or bank code, which is the branch identifier)
  • Account number

Including the name of the financial institution isn’t necessary – particularly with online banking – because the BSB will identify this for you.

A handy tip is to record yourself (or add a personal message) in the transaction description or reference. This will show up on the recipients account, letting them know who’s paid them the money.

How can I find bank accounts in my name?

To find ‘live’ bank accounts in your name, you’ll have to ask individual lenders, which involves contacting them one by one and proving your identity each time. To find ‘unclaimed’ bank accounts (those that have been inactive for at least seven years), you can use this website.

How do I open a bank account for a child?

There are few better ways for a child to learn about money management than through savings. And there’s a plethora of bank accounts designed specifically for young people and children.

A bank account for a child can be opened online, over the phone or in a branch in a few easy steps. The minimum age a child can open a bank account for themselves usually ranges between 12 and 14.

If the child is too young to open the account, you can do it for them as their legal parent or guardian. 

To do this, you would need to be over 18, have an Australian residential address and currently reside in Australia (or have proof of residency).

You would also need to provide:

  • Identification for yourself and the child
  • Your tax file number (TFN) or TFN exemption

Depending on the bank account, you might be able to choose what level of access the child has to their bank account (online and via the phone).

Do you need a bank account to get a credit card?

To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.

Can I find my bank account number online?

Yes, you can find your bank account number by logging into your online banking and clicking on the relevant account.

Can I open a bank account in another country?

Despite having a bad rap for facilitating tax evasion, it is possible and legal to open a bank account in another country, also known as an ‘offshore account’.

Some people choose to open a bank account in another country to invest overseas, for higher interest-earning potential or to access foreign banking services.

The process for opening an offshore bank account differs depending on the financial institution and country in which you’re opening the account.

Typically, you will need to provide identification such as a passport, a local bank statement and a signed declaration proving the source of the money being used to open your account. Usually, deposits into offshore accounts can be made by international money transfer.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.

How can I deposit cash into my bank account?

The traditional way to deposit cash into your bank account is to go to a branch and give it to a teller. These days, many banks will allow you to make deposits through an ATM as well.