Thursday marks the beginning of the new financial year but taxpayers have until October 31 to lodge a return for the current one.

Data provided to The New Daily shows that once they do, many of them can expect to receive thousands of dollars in refunds.

The ATO has so far issued more than 10.88 million individual refunds for the 2019-20 financial year, paying out about $2800 on average.

And given millions of Australians continued working from home for large chunks of the 2020-21 financial year, many can reasonably expect similar-sized refunds when they lodge their returns in the months ahead.

Here are some suggestions on what you can do with them.

Pay off outstanding debt

There are few more productive uses of a tax refund than paying off personal debt.

Research from the Reserve Bank last year put the average credit card interest rate at 19.94 per cent, and so paying off this debt is like earning a guaranteed, tax-free return of close to 20 per cent.

Such a high return would be very difficult to achieve through investing in financial markets.

And none of these alternative investments would come with zero risk.

Bolster your emergency savings

Building up an emergency savings fund will give you a valuable safety net to fall back on should you lose your job or suffer a loss of income.

Everyone will have different needs and requirements depending on their individual circumstances, but financial planners typically recommend setting aside at least three months of living expenses.

And so it’s worth tipping your tax refund into a separate savings account if you currently fall short of this mark.

Consider income protection insurance

Certified financial planner Gianna Thomson said it might also be worth insuring your income.

“Have a think about [what you would do] if you had a serious accident or became seriously unwell and couldn’t work for a long period of time, and your income stops because you don’t have sick leave,” she said.

“What’s your plan B? Because I have seen quite often people draw money out of their mortgage or use credit cards, and basically go into debt.”

Ms Thomson said many people will be fine without insurance, because they have enough emergency savings or a large enough investment portfolio to draw upon. But many others would do well to consider it.

Tip money into super

Adding extra money into your super will help deliver a more comfortable retirement – and it’s also a very tax-effective way to save.

Concessional superannuation contributions are taxed within your superannuation fund at 15 per cent – which for many people is much lower than their marginal tax rate.

That means you can reach your retirement savings goals much sooner by saving within super.

From July 1, you will be able to make $27,500 of concessional contributions every year.

• Related – Tipping extra money into super will reduce your tax bill. Here’s what you need to know 

Invest in shares

Since the pandemic crash in March 2020, sharemarkets have soared on the back of record-low interest rates and quantitative easing from global central banks.

Although some economists believe the RBA will hike interest rates as early as next year, cutting into sharemarket returns, central banks will still be providing lots of stimulus.

And the evidence shows diversified investments in the sharemarket deliver reliably strong returns over long periods of time.

In fact, according to Credit Suisse, the Australian sharemarket delivered an annualised return of 6.8 per cent between 1900 and 2020, making it the world’s top-performing sharemarket over that 120-year period.

The advice from ASIC’s Moneysmart website is that shares are an appropriate investment if you don’t need the money for at least five years.

And for novice investors – people who don’t work in financial markets – the best approach is to invest for the long term.

As the old saying goes, “it’s not about timing the market, it’s about time in the market”.