As the financial year draws to a close, now’s the perfect time to review your financial affairs and set the stage for a successful new financial year. By taking care of essential tasks and implementing sound strategic planning, you can position yourself for a smooth transition, and a strong start for the year to come.
Topping up super:
One important item for the To Do list is to top up your super with either concessional (pre-tax) or non-concessional (post-tax) contributions. For example, you could make a voluntary concessional contribution up to the limit allowed and then claim a tax deduction on your personal assessable income for it.
Consider making additional contributions to your own super account or your spouse’s account, to take advantage of tax concessions.
If you have unused concessional cap amounts from the previous five years and a super balance less than $500,000 on June 30 the previous year, you may be eligible to make a catch-up (or carry-forward) contribution greater than the annual limit.
Maximising contributions not only helps you build your retirement savings but can also provide valuable tax benefits. But it’s critical to be mindful of your caps and to ensure that you make any super contributions before the end of the financial year to meet the deadline.
Reviewing investments:
Reviewing your investment portfolio is a valuable task at any time but particularly now.
For example, you could look for any capital gains or losses that could be used strategically to manage your tax liability.
Also, it’s worth considering how your portfolio performed over the past 12 months against your goal of capital growth, income, or balance.
You may decide to readjust your goals or your investments, to help steer performance in the right direction for the next 12 months.
However, if you’re planning any changes, it’s important to check in with us to ensure you’re making informed decisions about your investments.
Paying expenses early:
Another useful strategy at tax time can be to bring forward any deductible expenses or interest payments before 30 June, to reduce your taxable income.
That could include incurring expenses on an investment property, prepaying interest on investment loans, making charitable donations, or claiming eligible work-related expenses.
Make sure you keep detailed records and receipts to support your deductions.
The ATO’s myDeductions app is a great place to start for free record keeping and to assist you prepare for tax time.
Setting up salary sacrifice:
As you look ahead to the new financial year, consider whether a salary sacrifice arrangement might be right for you.
Salary sacrifice allows you to divert a portion of your pre-tax salary directly into your superannuation, which effectively reduces your taxable income and boosts your retirement savings.
You will need to think carefully about your living expenses to calculate the amount you can afford to contribute to your super, ensuring you don’t exceed your concessional (before-tax) contributions cap of $27,500 (which will increase to $30,000 from 1 July 2024) to avoid paying any extra tax.
Your employer or payroll department can help you set up a salary sacrifice arrangement.
Checking your budget:
This is a good time to revisit your financial goals and assess how you’re tracking. Take the time to review your income and expenses, and identify any areas where you can reduce spending or improve your income.
This exercise not only helps you understand your financial habits but also allows you to reallocate funds towards your goals, such as paying down debt, building an emergency fund, or increasing your investment contributions.
Consult with professionals:
Don’t forget to check in with your Clear Sky Financial Team. Take full advantage of our panel of experts to review your current financial situation and goals, and guide you in making the most of any opportunities for financial growth and maximising tax savings.
We’re here to ensure that you’re complying with any obligations, while putting you in the best (pole) position to achieve your financial goals.
Information contained in this document is considered to be true and correct at time of publication. In addition, the information provided is general information only, and does not take into account any individuals’ objectives, financial situation and needs. Before acting on any information contained herein, you should consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs.