So the end of the financial year is fast approaching, and that means one thing – tax time. I know taxes aren’t the most exciting thing to be thinking about.
But I like to treat it like a the money equivalent of New Years Day – setting my financial resolutions for the year and looking at what I can improve on.
In that vein, I’ve rounded up six things you can do before the end of the financial year to maximise your deductions and ensure you’re squeezing the most value you can from your dollars.
I am a bit of an organisation nerd. I scan everything that comes my way and save it into Evernote. Business receipts are also photographed and sent to Shoeboxed, which automatically shares data with my accounting software.
I didn’t used to be this way. Getting my receipts in order to file my taxes used to be a hair-pulling exercise in frustration. I’d put it off for ages, finally panicking as the deadline loomed and hastily pulling everything together in one weekend.
I don’t want that for you, though. Start getting your receipts together now. Go through your bank statements and circle things that could be deductible. You’re more likely to remember now whether that meeting at Hunky Dory last month was with a client, than in 5 months time.
This is also a good time to figure out if anything you need for work or your business needs replacing or upgrading, which leads us onto Point 2.
2. Work Out If There Are Any Other Deductions You Can Get
Do you use a laptop for work and yours needs upgrading? Do you have to wear special clothing or shoes to do your job? Is there a course that you can sign up for now that relates to your job?
The end of the tax year is the perfect time to take advantage of any deductions that you can get for doing your job. You won’t have to wait too long to get your return back, so you won’t be out of pocket as long. And with the Federal Government flagging changes to the limits of some deductions, you might not have it as good next year.
While you’re at it, why not make any donations to charity you’ve been thinking of doing and get the deduction for all donations over $2. Tax deduction + warm, fuzzy feeling for doing good = winning.
3. Top Up Your First Home Saver Account
So the death knell has sounded for First Home Saver Accounts. From 1 July, you’ll no longer be entitled to the generous tax breaks (15% on returns) or extremely generous government co-contribution. I was p*ssed when they announced, but not surprised, given that they had such a low take-up.
There’s no hope if you didn’t have one before the Budget announcement. But if you’ve already got an account open then you’ve got until 30 June to maximise your government co-contribution for this year. Double check that you’ve put in at least $6,000 this financial year, and top it up if you can afford to.
You’ll be able to get at the money, no strings attached, from 1 July 2015 so think of it as a guaranteed 17% return on a one year investment.
4. Get Your Health Insurance Sorted
If you’ll be turning 31 next financial year then you’ll have to get private health insurance, or you’ll pay an additional loading when you do get around to getting it.
Get yourself covered from 1 July so you know that it’s sorted. A lot of funds also offer really competitive deals around this time of year, so it’s a great time to do some comparing and change funds if you need to.
If you’re under 30, but know you’ll be earning over $88,000 next financial year then it also pays to get private health insurance or you’ll end up paying the Medicare levy surcharge. The surcharge applies for every day you don’t have cover so you’ll want to have it in place from 1 July.
If you want to compare cover the government runs an impartial comparison service at PrivateHealth.gov.au.
5. Search for Lost Super and Get It Into the One Place
There have been a lot of changes to superannuation recently, not least of all is that it is now easier to find your lost super and consolidate it into the one fund.
Why would you want to do this? Because a) if your super is held in more than one fund you’ll be paying two sets of fees and possibly to lots of insurance premiums, and b) it’s your money so the more you’ve got working for you, the better your retirement will be.
The easiest way to search for your lost super is to use the ATO’s Super Seeker tool. You can then register to get all your super moved into your current fund.
Remember, not all your old super accounts may be marked as ‘lost’ – if you’ve recently changed funds in the last two years your old account may still have money in it. In that case just phone your old super fund and ask them if they still have an account open for you.
6. Review Your Insurance Cover
While you’re sorting out your super, it’s also a good time to check what insurance cover you have within superannuation. Most super funds automatically provide you with Death & TPD insurance (in case you die or are totally incapacitated), and also income protection cover (in case you get sick or injured and can’t work).
The automatic cover that you’ve got might not be enough to fully cover you, though. For example, income protection cover under super normally only covers you for up to two years. If you couldn’t work beyond that, you’d be on your own.
Alternately, you might find you have more cover than you need. If you’re single, with no dependents and little debt, then you might not need life insurance cover, or might need less than you have.
Now I know this stuff isn’t the most exciting stuff to do with your weekend. But for one afternoon’s work or so, you’ll have an awesome start to the new financial year.
Have I missed any other tips on what you should do around tax time? Or tell me, do you like to use tax time to get more focused on your money? Leave a comment.
P.S. I also like to use tax time to review my budget and plan for the year ahead. I wrote a while back about how I’m using Pocketbook to track my spending.