More than 10 million Australians are expecting a tax refund from the Australian Taxation Office (ATO) when they lodge their return this year. The vast majority will be using the extra cash to help pay for necessities and build up their emergency buffers as the cost of living continues to weigh on budgets.

Australians will be able to lodge their tax returns from July 1, and the average person is anticipating a refund of $1,519. About 52 per cent of people will be putting this extra cash into their savings, new research by Finder found, while 19 per cent will use it to pay off household bills.

Finder head of consumer research Graham Cooke told Yahoo Finance essential expenses would be taking priority over non-discretionary spending this tax time.

RELATED

• Overlooked ATO tax deductions that could boost your refund by $870

• Young Aussie reveals $390,000 property regret after falling into common trap

• Centrelink payment alert for 58,000 Aussies in caravans

“It’s been a hard slog for households and many are looking forward to a tax-time windfall to ease the pressure a bit,” Cooke said.

“For many, a tax refund serves as an enforced saving, especially when so many are just getting by each month.

“Over the past few years, savings accounts have been drained as families grapple with high interest rates and everyday expenses.”

Do you have a cost-of-living story to share? Contact tamika.seeto@yahooinc.com

Separate Finder research found 43 per cent of Australians had less than $1,000 in their bank account. Of those with less than $1,000, the average balance was just $215.

Experts generally recommend having enough savings in your emergency fund to cover three months of expenses. This can provide you with a financial buffer to cover you if you run into any urgent or unexpected costs, such as car repairs or an urgent medical bill.

Cooke said millions of people have had to rely on their emergency funds just to cover the essentials like petrol or electricity.

“The security and peace of mind of having an emergency fund can’t be overstated, so it’s always a great place to stash any windfall,” he said.

While most Aussies will be putting their refunds into savings or bill payments, others admitted they would put it towards a holiday (7 per cent), paying off their mortgage (6 per cent) and going on a shopping spree (5 per cent).

Paying off debt was another priority, with 4 per cent planning to get rid of credit card debt and 1 per cent paying off Buy Now Pay Later debt or a personal loan.

Aussies warned against lodging on July 1

While the cash boost will be welcome for many, Aussies have been warned to hold off lodging immediately on July 1.