The end of the financial year is not all balloons, champagne and celebrations for most people. Typically, unless you work in financial services, it is just another day like any other.
So then why is it significant? Well for one, this date is the line in the sand as to when the ATO decide how much you owe them for the all the hard work you have done throughout the year.
If you are after a swift and hefty tax return, here are the 5 things that you should be doing in the lead up to end of financial year:
Now is the time to make any last minute donations. Donations to a registered charity of $2 or more can be claimed as a tax deduction. Remember, you aren’t getting all of the donation back, the deduction just reduces the amount of income you must pay tax on.
2. Consider superannuation contributions
Consider making a concessional contribution to your super account. If you have some excess cash and you aren’t above the super contributions cap ($30,000 for 14/15 year for those under 50 and $35,000 if you are older), then investing in super could be the best bet. Any investment earnings within your super fund are only taxed at 15%, as opposed to investments personally owned being taxed at your marginal tax rate, up to 45%.
For those who are low income earners ($48,516 pa or less), you may be able to receive the government co-contribution of up to $500 if you make a non-concessional contribution before June 30. It’s free money, so if you have some spare cash to go towards your retirement, then consider this before the end of financial year.
Getting your ducks in a row now will help you when you prepare for your appointment with your accountant or tax agent
3. Get organised
Getting your ducks in a row now will help you when you prepare for your appointment with your accountant or tax agent. Collect all of your work related expenses, travel expenses and working from home expenses. Anything that you think could be deductible is worth taking with you. A good tax specialist will be able to tell you what you can and can’t claim. Either way, if you don’t have the receipts you can’t claim them anyway, so keep them safe and take them with you.
Some common deductions you may be able to claim depending on your situation include work and uniform expenses, travel, education expenses, donations, expenses in relation to your investments such as interest payable on loans, and income protection insurance.
4. Repairs and maintenance
If you hold an investment property (or two), then consider whether there are any repairs or maintenance that needs to be completed on your investments and whether you can do them by the end of financial year. You will be able to receive the deduction straight away instead of holding it off until next financial year.
5. Get your insurance up to scratch
Some of your personal insurance, like income protection is tax deductible. If this has been on your to do list for a while, then get it sorted by June 30. The premiums you pay will be tax deductible so opt for an annual payment and receive the full deduction immediately.
If you are relying on your tax return for a cash injection, then these tips are even more important. According to Moneysmart.gov.au only 70% of people actually receive a tax deduction back, the remaining end up owing the tax department. Prepare now to get yourself into the best shape. Your accountant and your bank balance will thank you for it.
photo credit: Checklist Chalkboard
Cara Brett is the Director and Senior Financial Adviser at Bounce Financial. Having worked in the financial services industry since 2003, she saw an opportunity to work with the young professionals and the movers and shakers in Brisbane, and so Bounce was born.