The first round of tax refunds Australians received late last year has failed to produce the predicted boost to the retail sector, with new research confirming that only 5 per cent of recipients actually spent their extra cash in the shops (in-store or online).
A survey commissioned by money.com.au, a new finance information platform for Australian consumers and business owners, revealed that 33 per cent of people that received their tax refunds by mid-November put the money straight into their savings accounts.
A further 28 per cent of the 1,006 surveyed Australian adults used the refunds to pay their bills, while 8 per cent spent their refunds on essential purchases, such as groceries and household repairs.
Other ways Aussies spent their tax refunds include paying down their mortgage (chosen by 7 per cent of respondents) and paying off credit card debt (6 per cent), with just 5 per cent revealing they spent their tax return at retail stores (in-store or online).
What are you saving for?
Money.com.au also asked the respondents that put their tax refund directly in their savings what they plan on eventually doing with it, with nearly half revealing that they will keep their savings well into the future.
“The lack of wage growth over the last few years and the rising costs of living have led to Aussies feeling the financial pressure,” explained licensed financial adviser Helen Baker.
“In previous years, people would spend their tax return on retail and leisure, but the findings reveal that the majority of us are struggling and are anticipating that the hard times will continue. As such, the tax refunds are simply helping us to get by now — help us to catch up where we were behind, or help us in the future.”
Commenting on money.com.au findings that under-30s and those in their 50s are saving more than any other age group, Ms Baker said that this is reflective of their life stages.
“Younger Aussies likely have the goal of saving a deposit for a home, and must demonstrate to the banks that they can save. Those in their 50s are also changing their mindset and thinking about their retirement, and have only so many pay packets left.”
Last week, the latest data from the Australian Bureau of Statistics showed a very slim annual retail sales growth in December, sparking fears that the signs of recovery seen in November were short-lived.
Calling the rate growth “disappointing”, the executive director of the Australian Retailers Association, Russell Zimmerman, opined that the ABS figures have stalled any resurgence in consumer confidence shown by the November lift driven by Click Frenzy, Black Friday and Singles Day.
“We were excited by November, but we warned bushfires and drought would compound any effects of December sales being pulled forward by events such as Click Frenzy, which is almost certainly the case here,” he said.
Mr Zimmerman, however, emphasised that while the December numbers underlined concerns of a quiet Christmas for retailers, the outlook for the remainder of 2020 wasn’t necessarily pessimistic.
“It’s difficult to draw too many conclusions from the December results because of the strength and number of extraordinary factors at work during that period, but we remain optimistic the retail sector is poised to bounce back strongly in 2020 as we have suggested for some time now,” he concluded.