The end of financial year (EOFY) is nigh. This time of year makes many of us quake in fear. Paperwork. Receipts. Tax.
But what if EOFY could be an annual highlight?
Just as New Year is a cause for celebration and renewal, EOFY can be a chance for you to get the most out of your finances, and start the new financial year with a spring in your step.
Here’s some ideas for making the most of EOFY.
It’s tempting to put off paperwork, but this will not make tax time disappear. Before you drown in receipts and invoices, dedicate a day well before EOFY to sit down and get organised.
If you are self-employed or a business owner, begin by gathering all your invoices and receipts. Prepare a ledger using an accounting program like MYOB, or an Excel spreadsheet. Enter your income and expenses, and sort by category.
Be thorough in locating your business expenses. Be sure to include all expenses such as websites, phone charges, automobile costs, travel expenses and office equipment.
If you are on a salary, you will need to complete a tax return. Make sure you’ve collated all your work-related receipts for allowable deductions like travel costs, phone, internet and work clothes. Your employer will issue your group certificate after 30 June, and you will have until 31 October to complete your tax return.
Numbers and paperwork make some of us crazy. If this is you, consider outsourcing your tax return or your business tax assessment to a tax accountant. This can be a claimable expense.
To make the next EOFY easier for yourself and your accountant, implement organisational systems early in the new financial year by recording income and expenses as they occur.
Consider making a purchase
If you are in the market for a new car or office equipment, EOFY is a good time to buy, as many retailers slash prices. If you are self-employed and your expense is business related, you may be eligible for the $20,000 instant asset write-off.
According to the ATO, ‘if you buy an asset and it costs less than $20,000, you can immediately deduct the business portion in your tax return.’ Treasurer Scott Morrison has just announced that this offer has been extended until 30 June 2019. Purchases larger than $20,000 may be deducted over a number of years.
Chat to your tax accountant about getting the most out of business purchases, and the best time to buy. Your Smartline Adviser can also help you sort out finance for big-ticket items.
Give to charity
There’s nothing like giving back, and if you make a charitable donation before EOFY, your donation may be tax deductible.
If you own an investment property, you may be able to claim on payable interest. You might also be eligible to claim on depreciation and related expenses. Note that as of 1 July 2017, travel expenses related to inspecting, maintaining and collecting rent for your investment property are no longer tax deductible. Discuss with your Smartline Adviser and your tax accountant what you can claim, and how.
Contribute to your super
The EOFY is a good time to consider boosting your superannuation. Not only are you building your retirement fund, you can also decrease your taxable income if you make a contribution before 30 June. You should check with your tax accountant or the ATO about the limitations in place, relevant to your age and income. Also check if you are eligible for a co-contribution from the federal government.
If you are in the market for your first home, check out the First Home Super Saver (FHSS) scheme implemented by the Australian Government last July. You can make a voluntary concessional (before-tax) contribution into your super fund, to save for your first home. This concessional amount will be taxed as super rather than your normal tax rate, so you save there. Talk to your tax adviser or the ATO about eligibility and parameters.
Review and renew
The EOFY is a good time to reflect on the financial year that’s been, and prepare for the one coming.
Analyse last year’s expenses. See where money is going, and where money could be saved. You might consider checking whether you are still getting the best price for insurances, health cover, phone and internet, and utilities.
Analyse your income too, to assess whether you are getting the most out of your hard-earned money. Consider depositing income into a high interest-bearing account, or offsetting against your mortgage. Subscribe to the ATO’s Newsroom to keep abreast of changes in tax laws, and learn about deductions you may be eligible for.
It’s also worth using EOFY to set yourself financial goals for the next financial year. Do you want to buy a new home? Renovate? Buy a new car? New equipment? Our simple Budget Planner can help you work out how you are going to reach your financial goals. Your Smartline Adviser will also help you get on track and make good decisions now that will pay off later.
Don’t let the EOFY scare you. Grab it by the horns. Book a chat with your Smartline Adviser to help you make the most out of this time of year.