This year, the average tax refund is anticipated to drop by 13 per cent to $2,344 while a recent survey showed that nearly half of tax payers are planning to use their tax refunds to pay off debt.

The Taxing Time survey of Bankwest of Western Australia revealed that out of 818 taxpayers surveyed, 42 per cent expect to receive a refund of less than $1000 this year. On the other hand, five per cent of the taxpayers expect to receive nothing.

The survey also found that 46 per cent of respondents planned to use their refund to pay off debt, while the other 30 per cent would save it. Less than a quarter of the respondents or only 15 per cent would spend it on entertainment.

Bankwest retail chief executive Vittoria Shortt said the survey found people to be more careful on their spending. "People are being far more cautious with their returns than in previous years and using their refund to save or reduce debt," Ms. Shortt said.

She said that most of the respondents would use their refund to reduce debt plan and put the money towards credit card bills, followed by paying off the mortgage.

"This generation is most likely to use their refunds to pay down debt while retirees are the least likely to use their tax return to pay back their dues," said Ms. Shortt.

But she said not everyone would be lucky enough to receive a refund or a break even.

"Among the respondents, 11 per cent of workers were hit with a tax bill last financial year. So it's safe to say more than one million Australians will owe the tax office money again come June 30."

Bankwest's survey also found that 59 per cent of respondents planned to use an accountant or tax agent for their returns. Last year only 52 per cent of the respondents claimed to use an accountant.

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