How to bring in the new financial year with a bang

Most of us wouldn’t regard the end of financial year (also known by its awkward acronym, EOFY) as a time to celebrate in the same way we do on New Year’s Eve. When it reaches 12:01am on 1 July, we don’t cheer and proudly proclaim, ‘New year, new me!’

But maybe we should. Instead of adopting unrealistic fitness goals you’ll give up on after a few weeks, perhaps set some more realistic long-term money goals where the rewards are well worth the effort. 

Maximise your tax return

The end of financial year is the time most of us start thinking about doing our tax return. 

Regardless of whether you do it yourself through the Government’s myGov portal, or go through the process with a tax agent, it’s important to collect all your deductions over the 2020-21 financial year to potentially maximise your return. You’ll need to understand which expenses and deductions are relevant to your personal circumstances before proceeding.

Some deductions may generally include: 

• Work-related expenses – these relate directly to the earning of your income and are expenses for which you’ve not been reimbursed. They could include travel, clothing, laundry, self-education, books, conferences and so on. Hopefully you’ve been keeping good records and all your receipts!
• Investment expenses – you may be able to claim the cost of earning interest, dividends or other investment income.
• Home office expenses –you may have potentially accrued these due to COVID-19. As a result, the ATO has introduced a temporary shortcut method for calculating home expenses. You can find out more here.
  Other deductions – these can include the cost of hiring a tax agent, income protection insurance or charitable donations and gifts.

Remember, you typically have until 31 October 2021 to lodge your tax return if doing so yourself. If you’re lodging through a tax agent, you will generally have until 15 May 2022.

Despite these deadlines being several months away, this is not an excuse to procrastinate! In fact, if you’re confident of getting a refund from the ATO, you’ll probably want that money sooner rather than later, especially if using it to set up other financial goals. For more information, make sure you visit the ATO’s website. 

Give your super a helping hand by making a voluntary contribution

Do you have some spare cash but nothing exciting to spend it on right now? You may want to consider putting it towards your future by making a voluntary contribution to your super account. 

Voluntary contributions could not only help grow your super balance, but if you are eligible you may also be able to claim certain tax benefits.  Some small change contributed now could add up to big change in retirement! Depending on your circumstances, there are a few ways to do this that are noted below. 

• Personal tax-deductible contributions – You can consider making contributions from your take-home pay or savings to your super account before the end of the current financial year, and then consider claiming a tax deduction in your tax return by lodging a notice of intent form. 
• Downsizer contributions - 65 years or older? You may be able to contribute $300,000 from the sale of your main residence to super.
• Spouse contributions - if your spouse is not working or a low-income earner, you may be able to contribute to their super account and may be eligible for a tax offset.

Learn more

Just remember its best not to leave things to last minute. You should aim to submit all forms and payments by 23 June 2021 if you want your contributions to count within the 2020-21 financial year.

Review your finances and living expenses

The end of financial year can also be a great time to revisit all the utilities and bills you regularly pay such as electricity, internet, even a gym membership and shop around to see if you can get a similar service at a better price. While transferring to a new provider might seem tedious at the time, it may make a difference to your monthly budget.   

Set up an emergency fund

Life’s nothing if not unpredictable. You never know when a major cost will hit on very short notice, such as car repairs, unplanned travel or a sudden medical bill. 

A commitment you can consider from the start of July, is setting aside a bit of money every week into a separate savings account and by the end of the year, you could have a good chunk of change to help cover unexpected emergencies. 

Establish a budget to manage spending habits

Finally, 1 July can also be the perfect time to review and reform your spending habits. By connecting your accounts to a budgeting and savings app, you can often categorise all your expenses under neat headings. 

If some categories are too high up the spending hierarchy for your liking, perhaps it’s time to consider cutting down on your discretionary spend. For example, if you’ve been eating out too much, cook more meals at home. If you’re splurging too much on online retail, maybe hold back on clicking that purchase and consider whether you really need it. 

Think of your new financial sobriety as the equivalent of a “dry July” – except, you can make it part of your routine full stop.