How To Approach Tax Time? As we approach the end of the financial year on June 30th, many checks and balances get into place so that you can make the most of your money and the least of your tax. Below is your guide on how to make this end financial year count:
EOFY – What exactly does this mean?
There is no doubt that talking about the End of the Financial Year (EOFY) can be extremely boring; Tax returns, paperwork, and paying for an accountant to do your dirty work. All things that spring to mind around ‘tax time’. Despite what most think, the EOFY is a time where you can take stock, reset and reload, to ensure you’re set up in the best way. Essentially, the EOFY is the end of your tax year – a time where some jiggery-pokery becomes more tax-effective pivotal so don’t end up paying more than you should to the ATO, or worse yet forgetting about the money you should be paying. Needless to say, it’s crunch time and you are best to get yourself set up correctly.
The biggest mistakes people are making
Host Andrew Baxter has spoken plenty of times in previous broadcasts on the importance of having a date with your money. What most people fail to do around tax time is having a ‘big dinner’ of dates. The second error make around the EOFY is leaving your work too late. The message? GET THINGS DONE ASAP! Ensure to give your accountant everything they need early on to ensure what needs to be done. It’s no secret that getting your bookwork under control early is pivotal.
Lastly, a piece of advice that host Andrew Baxter gives to lodge your tax return as late possible can. If you are one that usually owes the ATO money (ie. You don’t qualify for a refund) string this part out, make use of the free cash flow in your business. Essentially, you’ll have a free asset that you can use to your advantage which most don’t realise you can do. Other little tricks like selling the stock at ways to bring your tax down legally that most forget about.
How to make this EOFY count
Making this EOFY count with a few extra little tips and tricks can make all the difference in long-term picture. The first – make a $25k voluntary contribution to your Superfund. This will not only ensure you are more comfortable upon retirement, but also bring your tax down this year significantly. The second get yourself a good financial advisor to work alongside your accountant as you aren’t just dealing with tax returns.
As Andrew Baxter mentions throughout the broadcast, having an expert team of advisors in your corner to ensure you are making the most out of your money is crucial. Hacks like utilising a business line of credit vs. your personal line of credit as an example are services good financial advisers can instill with the support of your accountant. In the investment space, it may be time to de-risk a touch and sell off some of your shares to claim the capital loss and ultimately bring down your tax. Many investors forget that they can actually claim their losses by selling shares and simply re-buying back in on the 1st of July – food for thought.
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From little things, big things grow
The fact, not everyone is on top or knows about the hacks mentioned throughout this blog (you do now). However, don’t panic! Starting off small and changes in how you handle your EOFY is a good start to making big impacts. Obviously, starting to develop your team of advisers who will take advantage of tax time will prove immensely beneficial down the track. For any advice on specifically the investment space of the EOFY, reach out to Andrew’s team.