YOUR END OF FINANCIAL YEAR CHECKLIST
The end of the financial year is an opportunity to take stock of your financial situation, prepare for tax time, and plan for the next year.
REVIEW YOUR INCOME AND EXPENSES
A useful first step to improving your finances is to make sure you have a clear picture of where your money is coming from and where it is going.
A budget or “Lifestyle Priority Planner” as we like to call it, is a useful tool to help you track your income and expenses and identify areas where you can save more or spend less.
Reflect on the effectiveness of your budget over the past year. Did it help you achieve your goals? If your budget is not working for you, now is the time to try to find ways to adjust it to suit your needs and goals.
OPTIMISE YOUR TAX POSITION
Some of the things you can do to optimise your tax position before the end of the financial year include:
- Claim deductions for work-related and home office expenses, such as travel, equipment, uniforms, subscriptions, and phone and internet bills. Make sure you have receipts or records to support your claims.
- Claim deductions for self-education and professional development expenses, such as course fees, textbooks, stationery, and travel. The expense must be related to your current work or income-earning activities.
- Claim deductions for charitable donations. The charity must be a registered deductible gift recipient. Most will issue you with a receipt, but you do not need this to claim if you can show evidence of the donation in another way like on a bank statement.
- Claim deductions for investment expenses, such as interest, fees, and repairs and maintenance. The expenses must be related to earning income from your investment.
- Prepaying expenses, such as interest, insurance, subscriptions, or memberships, which can allow you to claim a tax deduction in the current year for expenses that relate to the next year.
- Deferring capital gains by delaying the sale of an asset which can reduce your taxable income in the current year and defer the tax liability to the next year.
- Reviewing depreciation of assets used for income production. This can allow you to claim a tax deduction for the decline in value of your assets such as buildings, fittings, and furniture.
REVIEW ADDITIONAL SUPER CONTRIBUTIONS
- Consider making personal tax-deductible super contributions, up to the $30,000 concessional contributions cap applicable for this current financial year, (which includes any employer contributions). These contributions are taxed within super at 15% versus your marginal tax rate.
- Check whether you have scope to utilise the carry-forward catch-up contribution rule to make additional tax deductible concessional contributions into super to further reduce your taxable income. This would be particularly useful if your taxable income is expected to be particularly high in this current financial year, possibly from the sale of an asset with associated capital gains.
- Making spouse super contributions, which can entitle you to a tax offset of up to $540 if your spouse earns less than $40,000 and you contribute up to $3,000 to their super fund.
- Accessing the government’s super co-contribution scheme, which can boost your super savings by up to $500 if you earn less than the threshold and make a personal after-tax contribution of up to $1,000 to your super fund.
CONCLUSION
The approach to the end of the financial year presents a prime opportunity to not only maximise last-minute tax deductions and super strategies but also to conduct a broader financial review. Please call us today to make an appointment to assess your overall financial health.