The new financial year may not come with the same celebrations or hype as the regular New Year, but it is the perfect time to set some financial resolutions.
A few simple new habits, particularly when it comes to managing your tax, can help better your financial position over the coming year – and who wouldn’t want that?
Whether your tax is straightforward or more complex, whether you rely on your accountant or do it yourself, the bottom line is that it pays to be organised. If you find yourself scrambling to get everything together for your tax return year after year, it may be time to get some new processes in place to make it all easier on yourself.
Here are the top 5 habits to get into NOW to kick start a better financial year!
The key to getting organised is to do it in a way that works best for you. Whether you are happier with spreadsheets, apps or good old-fashioned paper, use whatever tools you are comfortable with to keep your essential paperwork organised. This includes invoices, receipts and all other relevant record keeping you will need to complete your next tax return.
The old adage is true – you don’t know what you don’t know. Expert advice, especially around tax planning and structuring is invaluable and can maximise your savings or return so don’t be afraid to reach out to the professionals such as a financial adviser or tax specialist*.
For example, a financial planner can work with you to get a holistic view of your finances, and give you advice tailored to your individual needs and goals. Whether you’re looking for the best way to manage your superannuation or financial affairs better, contact P&N Bank – we have a range of financial services to help you.
You know you need to track your work-related expenses and keep a logbook but the longer you leave it, the harder it will be (and the more likely you are to miss out come tax time). Maintain a diary for something such as home office use for a period of four weeks to establish your usage for the year ahead.
If you are eligible to claim use of your vehicle for work-related travel you may be able to maintain a logbook for just twelve continuous weeks without needing to do it again for a period of time (discuss this one with your tax accountant).
There is no time like the present so don’t put it off – start your logbook today.
Consider super salary sacrifice and investigate with your financial planner if this could work for you. A salary sacrifice strategy allows you to make contributions to super from your pre-tax salary. Your salary is then reduced by the amount you choose to sacrifice.
The benefits of this are two-fold: not only does your super balance increase, but this strategy could also reduce your taxable income and therefore the amount of tax you pay.
Also, super contributions are concessionally taxed at just 15 per cent (up to 30 per cent for individuals with income over $250,000) instead of your marginal tax rate, which could be as high as 47 per cent. Concessional contributions, or those made with pre-tax money, are limited to $25,000 per person per year.
You may also be eligible to claim a tax deduction for your personal super contributions. You must provide notice to the Trustee of your super fund and have it acknowledged in order to claim a deduction and note that your personal contributions count towards your annual before-tax contributions cap.
Well-timed purchases can help you maximise your tax return (or reduce any tax you owe) on your 2018-19 tax return. This could include equipment or stationery purchases, uniform upgrades or work related bill payments.
It does not make sense to purchase items solely for the purpose of claiming deductions on your tax return but, if there is an item you need to purchase anyway, plan to get it ahead of the end of this financial year. Just don’t forget to track it!
* for specialist taxation advice please contact a registered tax agent or taxation professional.
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