With the end of the financial year fast approaching, it’s time to start thinking about our finances. But with tax rules changing every year, it can be a little confusing when trying to understand what you can and can’t claim.
Scott Baker, director of award winning financial firm Mobbs Baker Wealth, says a few small considerations now, can help save you money and unnecessary stress when the year ends.
“The Federal Government’s recent budget made a number of changes to support small business to encourage spending and provide taxation incentives,” Scott says.
“Now is a good time to start thinking about the year ahead so that you are adequately prepared come June 30, and can make the most of possible tax deductions.”
With that in mind, Mr Baker has shared his top five tips to help keep you sane and savvy as you prepare for tax time.
1. Small Business? Spend to save!
Exciting news for small businesses in the recent budget, with the announcement of a new $20K write off. This means small businesses are immediately able to write off single assets up to $20,000 in value.Businesses should be considering future expenses now, such as technology upgrades or equipment for next few months, perhaps even a smaller vehicle. It’s important to evaluate whether there is a need to bring forward these purchases before June 30.
2. Add to your Super!
Adding supplementary money into your super account while earning good money is a great way to boost your retirement fund, but is also a clever way to save on tax. This is applicable to both self-employed and employed people and additional superannuation contributions allow further tax deductions for simply putting their own money away for the future. So, if you can afford to put away a little extra into the retirement fund, now is a good time to start adding those extra contributions.
3. Prepayment of expenses
This isn’t utilised very often, but it offers a great way save some extra dollars. Many people don’t realise that you can prepay tax deductible expenses for the next 12 months and claim that tax deduction in the year it was paid.This is a very effective strategy and great idea for businesses who are able to pre-pay rent or interest on loans.
4. Consider your insurance
How much are you paying for insurance? Like many Australians, if you pay your insurance outside of super, then you are paying for it with after tax dollars. What some people don’t realise is that your superannuation can hold onto your Life & Total & permanent disability insurance (TPD). By paying it through your super, you then have the option to salary sacrifice the premiums you were previously paying to save tax and ensure that your premiums don’t erode your fund balance.
5. Don’t DIY – Seek Professional Advice
The ATO’s online e-tax system can be a painful process for those trying to decode the systems lingo. More importantly, going DIY means you may be missing out on deductions you didn’t know you were eligible for. Every person is unique and there are many different opportunities for individuals and businesses to save tax. Reach out to your accountant or adviser so that they can cast an eye over your financials and make recommendations to save you or your business money.
For more information visit www.mbwealth.com.au
How do you save money at tax time? Tell us below…
