Typically at the end of the financial year, people start making last minute attempts to improve their tax position, which may lead to poor decisions being made.
At McQueen Group, we believe the new financial year is the best time to start your tax planning for the year ahead. We see May and June as the months to make final, small adjustments in line with your overall strategy.
Areas you should consider are:
How much tax are you paying?
It can sting a bit when you look at your PAYG Summary and see how much tax you paid in the previous financial year. To make the most of your tax return, you need to know ahead of time what you can claim and keep records to back these claims 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 ensure you check the ATO’s guidelines or seek professional advice if you are unsure.
TIP: If you pay your Income Protection insurance personally, you can claim it as a tax deduction. Now could be the perfect time to review your Income Protection policy and ensure it is appropriate for your current salary and structured in the most tax effective way. Read more on Income Protection insurance here.
How do you track your receipts?
The days of giving a box of receipts to your Accountant to do your tax return are over. Many Accountants no longer accept this “method” of documentation collection, and others charge extra for sorting through your shoe box. However, it is important to keep all your tax receipts and documents somewhere safe for the year ahead – a little planning now will ensure you won’t waste time this time next year looking for all your bits and pieces as you will have them all in the one place.
TIP: Take photos of your receipts and tax receipts and email them to yourself. Set up an email rule so they all get sent to a “tax” folder or check out the ATO App “myDeductions”, it’s a great way to save all your receipts.
Are you making the most of your superannuation?
Making additional contributions to your superannuation is a great way to create long- term wealth. This year (2017) is even bigger than most when it comes to sorting out your superannuation. Several changes enacted in last year’s Federal Budget may mean you need to make some changes from your current strategy. The concessional contributions cap is now $25,000 for everyone; if you have already been salary sacrificing into your superannuation account, you will need to check that your total contributions will not send you over the concessional cap.
TIP: There are lots of ways you can contribute to superannuation and each method has it’s own benefit. For example, making small monthly contributions is much easier on your cashflow than one lump sum in pre June 30 – read more on superannuation contributions here.
What do your spending patterns look 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. Now is the time to review your past financial year to identify opportunities to cut back on spending, save more towards your future goals and ensure you are claiming appropriate expenses in your tax return.
TIP: Using a cashflow tracking software can help you track your expenses going forward, check out more cashflow tips here.
Preparation is key – now is the perfect time to start your tax planning.
McQueen Financial Group is a corporate authorised representative of Total Financial Solutions Limited. AFSL No. 224 954, ABN 94 003 771 579. This information is of a general nature only and does not take into account your investment objectives, financial situation or particular needs. You should not act on any information in this report without first consulting a professional investment adviser in order to ascertain whether the information and any investment decision is appropriate. This information is believed to be accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained, and neither TFSA or its Representatives and officers, agents or employees of either of the aforementioned shall not be held liable for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence).