Re-investing interest and doubling up with a tax-deductible contribution to a super fund as well as a tax return is a major help toward benefitting from compound interest further down the line, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA has called on consumers to take the opportunity to ‘double up’ with a tax refund and tax-deductible super contribution before the 31 October tax return deadline.
Chief executive Martin Fahy said the benefits of compound interest should be compelling for Australians who should avoid short-term indulgences and focus on superannuation accumulation.
ASFA found that if a 35-year-old person put a yearly tax refund of $1,400 into a super account, they would have an extra $65,000 by age 67. Similarly, if a 45- year old were to contribute the same annual amount, they would accumulate an additional $37,000.
The Australian Taxation Office (ATO) expected to distribute around $35 billion in tax returns to around 10 million Australians this financial year.