The end-of-financial-year period isn’t really a time most people relish, but it does offer an excellent opportunity to review your finances and possibly free up funds for more enjoyable pursuits.

In four easy steps, we’ll show you how to make the most of your tax bill and potentially save money for the more important things in life.

 

1. Prepay expenses

It almost sounds too good to be true but if you have any spare cash, it might be worth paying for certain things now that you’ll actually use next financial year. That is, bringing forward tax-deductible expenses to this current financial year will help you accelerate your deductions and reduce your tax bill.

You may be able to pre-pay 12 months’ interest on a margin loan, or pre-pay 12 months’ premiums on income protection insurance held outside super, and claim the full deduction in this year’s return. You might also consider pre-paying membership fees for professional organisations and subscriptions for work-related publications.

 

2. Be charitable

The great thing about EOFY is that it often brings charitable donations to the forefront of our minds. Giving money to worthwhile causes and reducing your tax bill at the same time – could it get any better? There’s no limit to how much you can donate and claim back, just as long as you have the receipts to prove it.

Any donation over $2 can be claimed, provided you have the receipt and the donation is to a Deductible Gift Recipient (luckily most major charities are DGRs). If you’re unsure whether the charity you are wanting to make a donation to is a DGR, you can check via the ATO’s ABN lookup. Keep in mind that you can’t claim for donations that give you some form of benefit, such as raffle tickets or fundraising dinners.

 

3. Offset capital losses

Have you sold shares or an investment property this financial year and made a tidy sum? You may like to consider looking at what investments you have that are sitting at a loss and selling those off too, as the resulting capital losses can be offset against the capital gain. In other words, you can recoup your losses and not have to pay tax on a subsequent gain.

You are not restricted by the type of assets that can be used in the offsetting process. For example, gains made from investing in property can be offset by losses on shares and vice versa. Before deciding to sell under performing assets, you should always take into consideration the quality of the stock and future expectations. Advice from a professional can also help in making this decision! You can get in touch with us on 1300 850 757 or email us at GBSAU_Admin@ajg.com.au to discuss strategies around your investments.

 

4. Review your insurance

In the midst of all things to do with taxes, receipts, deductions and savings, the EOFY year brings a timely reminder for you to review your personal insurances as your financial circumstances change. If you take a moment to reflect on the past financial year, have you experienced any significant changes? This could be related to your income, financial situation (such as changes to debt), or family situation (such as marriage or welcoming a new baby).

If you answered ‘yes’ to any of these, or experienced any other significant life changes that may impact your financial situation, it is important you review your personal insurance needs to ensure you have the right cover in place. This review will help make sure you’re not under-insuring yourself, or paying for cover you don’t really need. It’s also a good idea to allow for future financial responsibilities, not just the ones you have currently. For example, consider your child’s long-term education needs or your spouse’s upcoming retirement.

Remember, personal insurance is not a ‘one size fits all’ solution – you can tailor your insurance cover to your lifestyle, so it’s important to keep up to date with your policy to ensure it still fits your needs.

 

There are plenty of ways that you can free up funds before the curtain comes down on yet another financial year. With a little bit of planning and forethought, you could give your tax return a huge boost.

 

The information and any advice in this article does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. When considering whether to acquire a financial product, before making any decision, you should obtain the relevant product disclosure statement.