31 May 3 tips to be prepared for a new financial year
The end of the financial year is always a busy time, whether you’ve been hanging out to do your tax return for months, or are struggling to piece together random receipts and paperwork at the last minute. However, it’s also a good time to review your financial affairs more broadly. After all, the best planning is done when you’ve got all the information in front of you.
1. How much tax are you paying?
Let’s be honest – it can sting a bit when you look at your pay slip and see how much tax you’re paying. To make the most of your tax return, you need to know ahead of time what you can claim and keep records to back them up. What you can claim will depend on whether you’re an employee or a sole trader operating a business. The general principle is that you can claim certain expenses incurred in earning an income.
Some frequently overlooked deductions include the cost of managing tax affairs (i.e. last year’s accountant or tax agent bill), depreciation on essential work equipment, and professional education costs. Just make sure you check the ATO’s guidelines or get professional advice if you’re not sure.
TIP: You may want to bring forward some expenses you were planning, or delay receiving some income (if you have a choice), in order to maximise your tax return. For example, you may be able to pre-pay up to a year’s worth of some expenses.
2. Are you making the most of your super?
This year is even bigger than most when it comes to sorting out your super. A number of changes enacted in last year’s federal budget may mean you need to make some tough but swift decisions in the lead-up to June 30. For example, the current concessional contributions cap ($30,000 per financial year, or $35,000 for members aged 49 or over) lasts until June 30. This is the same deadline if you are considering channelling some extra after-tax money in to your super. You’ve got until the end of the financial year to put up to $180,000 in to your super.
TIP: Make the most of higher superannuation caps before June 30. Consider making a personal super contribution (after-tax) and receive a government co-contribution up to a maximum amount of $500 if you are a lower income earner.
3. What are your long-term spending patterns like?
Whether you’re running a household or a business (or both), it’s hard to get an accurate view of your expenses based on any one month. Looking at your income and expenditure over the whole year can help you get some fresh perspective on where your money has been going. On the plus side, you’ll be able to identify opportunities to cut back on spending and save more towards your goals in the future. And the fun part (yes, there’s a fun part!) is that you can set fresh new goals to keep you motivated and disciplined.
TIP: It’s a good time of year to do a budget to see where your money is being spent and in doing so identify measures that can be taken to help you to achieve your financial goals.
We can help…
Still feeling overwhelmed by end of financial year decisions? Or just wanting to make the most of the opportunity that this time of year brings? Take the time to consider your superannuation, insurance, investments and retirement plan as well as your tax return. If you need tax advice, financial planning advice around super and/or SMSF or tax returns/audits prepared for your SMSF. We can help with all of these so please don’t hesitate to contact us on 02 9633 5530 or complete our contact form.