Peninsula Partners Accountants

Hurry... Last Days!

The 30th June is the accountant's New Year's Eve.  Ok, the parties aren't as much fun (mainly because they're attended by other accountants), but the countdown clock is very real.  And decisions that are made either side of midnight on the 30th can be extremely important to your finances.  Here are some ways that can help you enjoy a happy new financial year.

1. If you need it, and it's deductible, buy it now.  But if it's only one of these, don't! 

June is the month Harvey Norman and Officeworks spend big on their "tax time" advertising, and if you need some stationary for your office or a new computer for work, then it makes sense to buy it now and claim the deductions this year rather than next.  But buying something simply because it is deductible...well, that's just a waste.  The old adage of not buying something for $5 just because it used to be $10 still rings true.

2. Prepay...and defer

Your total earnings for the year are based on the date your receive and spend your cash.  Therefore, if there's a deductible expense you're likely to incur in July or the months that follow, there's nothing stopping you from prepaying these costs and claiming them this year.  And on the flipside, if you can defer receiving some income until July 1st (eg your tenant paying their June rent in July), then you can put off paying tax on these amounts for another 12 months.

3. The shoebox still rules...but there are other methods

Keep your receipts!  Pop them into your wallet and then put it in the year's shoebox.  Your accountant will work out whether or not it is deductible, but if you don't have evidence, particularly for items you have paid for in cash, you will miss out.  Note that the ATO is slowly keeping up with the times, and photos of bills and credit card statements (that clearly reflect what was purchased) suffice as evidence thse days.

4. Superannuation (even though it is boring)

Super represents the best tax break that is readily available to salary and wage earners.  If you happen to earn between $37,000 and $80,000 then every $1,000 extra you can salary sacrifice into your super, you save $195 in tax.  Ok, you may not be able to touch it for a number of years, but you won't find a better deal for your money anywhere else.

5. The Capital Gains Tax shuffle

The 30th June and 1st July are strange days on the sharemarket.  People can take advantage of "crystallising" their profit and losses by buying and selling either side of the 30th June.   For example, if you have some shares that increased in value, and 2015 happens to be a lower income year for you (eg work not paying a bonus, you've just started a new business or you've taken some parental leave), it may be a good time to sell an asset this year.  This is because the profits you make on buying and selling an asset are added to your other income.  This works well with assets that are readily turned into cash, and have low transaction costs (ie not a rental property!).

6. Centrelink benefits

If your circumstances change, it's worth letting Centrelink know.  If you think your income will drop in FY16, you'll be entitled to more, and if it goes up, well, that will create a repayment you have to make at the end of the year, so it's still worth it to prevent a surprise bill.  And do it online so you dont have to spend 1.5 hours on hold!

Also, it's quite surprising the range of benefits available to which you may be entitled.  Without wanting to make light of it, Centrelink offers a Continence Aids Payment Scheme, which, according to the Department of Social Services bladder and bowel website (yes, it exists), entitles recipients to over $500 per year to ease the load (so to speak).

They are six generic ones, but there will undoubtedly be many, many more specific to your individual circumstances, especially if you happen to be a business owner.  So give Peninsula Partners a call on (03) 5989 2239 or 0404 865 279 to take advantage of the end of the financial year.  Be quick...midnight is approacing!