The end of the financial year doesn’t have to be stressful and filled with panic as you search for the relevant paperwork that you meant to keep one place only never got round to doing.
With the right preparation, lodging your tax return should be a walk in the park. And, who knows … you could even increase your refund!
Here are some top tips to help you sort out your finances for the coming financial year.
Start by deciding when and how you intend to lodge your tax return. Will you do it via the MyGov Portal, online, via a lodgement service or ask your accountant? This may be determined by the complexity of your situation but whichever path you decide to take be sure to allow yourself plenty of time. You might want to consider meeting with your accountant or tax adviser in early June to ensure you’re maximising the investments and deductions available before 30 June. Don’t put this off until the last minute only to discover that you have missed out.
Locate everything you need
Most people find that the most difficult part of lodging their tax return is gathering together all the necessary paperwork that they haven’t managed to stay on top of during the year. It makes life far easier if you keep your tax information filed in one place throughout the year – including bank and credit card statements and receipts.
You will also need payment summaries, information on any lump sum payments, details on foreign earnings, details on your spouse’s earnings and expenses (if you have one that is), and any other income you may have gained from property rental or investments etc. Visit the ATO website and you’ll find a complete list of the paperwork you need.
If you find it a struggle to stay organised, why not invest in a spike or tray that you can place any relevant paperwork on, as it comes in. This way you know exactly where to find it when you need it each year.
Be aware of your deductions
Many people don’t know what they can claim tax deductions on, so don’t forget to investigate this point further. Knowing what expenses are tax-deductible could significantly increase your refund. Typically, these include uniform costs, work-related training courses, office expenses and some insurances.
Visit the ATO website where you will find a handy list of deductibles. If you wanted, you could always purchase deductible items for next year before the end of June so you can deduct them against this year’s income. Don’t forget to check in early with your accountant to make sure you get it right.
Boost yours and your spouses super
By relinquishing some part of your salary throughout the financial year, not only will you increase savings for your retirement but you’ll also reduce your taxable income. Salary sacrificed super contributions are typically taxed at 15% which may be lower your marginal rate. Contributing a lump sum before 30 June can also work for many individuals provided they get the type of contribution right.
If your spouse is a low-income earner or not currently working then probably they are accumulating very little if any super to fund their retirement. You can help by putting money into their super and you may be eligible for a partial or full tax offset.
Reduce tax further
There are several other steps you can take before the EOFY to reduce the amount of tax you have to pay. The best place would be to start with any investments you have in your name. It could be a wise move to cash out that investment and use the money to make an after-tax super contribution. This helps build your retirement pot while simultaneously reducing the amount of tax you’ll have to pay.
In addition, if you have income protection insurance cover, why not pre-pay your premiums a year in advance so you can take advantage of a tax deduction. Taking out TPD or life cover throughout their super while pre-paying investment loan interest, also helps some people benefit from tax concessions
As a final thought, if your investments have led to capital gains, then you might want to consider selling an investment that is performing badly and use the capital loss to offset the taxable capital gain.
Get ready for the financial year ahead
You have until 31 October to lodge your tax return and hopefully, by understanding your finances, once your return has been lodged you will feel better equipped to plan for the next financial year. Try and think of ways to improve your budget or whether you have any funds you can invest. Setting up an automated savings program even with small funds can see it quickly mount up.
By following the above tips, speaking with an accountant or financial adviser, and doing some research yourself, means you should easily be able to transition into the new financial year.
If you need any assistance with your EOFY tax return then we’ll be happy to assist. Call our friendly team at JSM Accounting on 07 3814 6512 to make an appointment or book online.