As the End of Financial Year (EOFY) approaches, it’s crucial for individuals and businesses to start planning and preparing. This pivotal time presents both challenges and opportunities that require careful consideration. In this blog post, we’ll explore 6 key factors to keep in mind as you navigate the EOFY landscape.
1. Check your Income Statement: For most Aussies, gone are the days of receiving a payment summary due to the implementation of single-touch payroll, whereby your employer reports your income directly to the Australian Taxation Office (ATO) each pay period. So you shouldn’t expect to receive a physical summary of your income from your employer any more. Instead, its up to you to check on those details. This is best done within your myGov account if it is linked to your ATO service. You should be able to find your final EOFY income details within the first week or two of July. If anything looks amiss, contact your employer to clarify or get further advice from your accountant.
2. Collate your Tax Deductions: Identifying tax-deductible expenses requires consideration of several factors. Firstly, it is crucial to assess whether the expense was directly linked to your professional endeavors or income-generating activities. This direct connection is a fundamental prerequisite for potential deductibility. Additionally, ensure that the expenditure was not reimbursed by your employer, as reimbursed expenses are typically ineligible for deduction. Furthermore, maintaining meticulous records, such as receipts or bank statements, is imperative to substantiate the legitimacy of the expense. Common tax deductions are:
Donations to registered charities
Clothing/Laundry/Dry Cleaning of uniforms
Work-related education expenses
Work-related PPE or Industry Memberships
Costs related to investment income, such as interest charged on money borrowed to buy stocks or rental properties or the cost of investment advice.
3. Asset Management Review: Review your asset portfolio and consider strategic disposals or acquisitions that could impact your tax position. If there are any underperforming investments, consider whether it might be time to sell them and realise a capital loss, which can offset any capital gains already expected in your tax return. This is a great area to receive professional advice.
4. Superannuation Contributions: Explore opportunities to optimise your superannuation contributions and take advantage of any available tax benefits for you OR your spouse.
5. Tax Planning Strategies: Consult with financial advisors or accountants to explore legitimate tax planning strategies that could benefit your individual or business situation.
“You must pay taxes. But there’s no law that says you gotta leave a tip”
Morgan Stanley
Take advantage of strategies that your professionals will help you navigate and it may save you heaps of money in the long run.
6. Consult a Professional Early: Many Aussies will consult their Accountant well after the EOFY to simply process their tax return. However, many of the strategies that will help them minimise their tax need to be in place before the EOFY. An hour or less of your time may make the difference of thousands of dollars, so this is an investment well worth it. Speak to your Financial Advisor and/or Accountant about pre-EOFY tax planning before it’s too late!
By addressing these 6 key considerations, you can approach the EOFY with confidence, maximize your financial outcomes, and set the stage for a successful new fiscal year.
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