When the end of the financial year approaches, it’s a great time to think about extra opportunities that could give your finances a boost. Here are some simple ways you might be able to save money by minimise your tax bill at year end.
Use your superannuation to save on tax
Putting extra money into your super before the year ends could help you reduce the amount of tax you have to pay, while also helping you prepare for your retirement. Here are some of the ways you can benefit:
- Salary sacrifice: This is when your employer pays money into your super using your pre-tax salary. Expecting an end of year bonus? Ask your employer about salary sacrificing all or part of it so you save on tax.
- A one-off contribution: Putting any spare (after-tax) cash you have into super could mean you pay less tax than you would investing it in other ways.
- Government co-contribution This is designed to help low-middle income earners . It means that if you put money into your super using your after-tax salary, the government also makes a contribution for you, up to $500.
- Spouse contributions : If your spouse is on a low income (maybe they work part-time) any after-tax contribution of up to $3,000 you make to your spouse’s super account can entitle you to a $540 tax offset.
Remember, the amount you can pay into super before the end of the financial year using before or after-tax income is capped. You can check these limits with the Australian Taxation Office (ATO). A financial planner will also be able to help you with this and advise on other ways you can use your super to save money.
Buy a car or other big item (if you need it)
If you’re on the lookout for a new car - or indeed any big-ticket purchase - the end of the financial year can be a great time to go shopping. Lots of car dealers and other retailers drop their prices at this time to boost sales before the year ends. And because lots of consumers are out looking for a deal, retailers competing with each other may offer a better price to get your business.
Donate to charity
Did you know that some donations made to eligible charities can be used to reduce the amount of tax you pay? To receive a tax deduction, the donation must be $2 or more, be made to an eligible charity, and be claimed in your tax return for the income year in which you made the donation. Always check that the organisation you’re donating to has 'deductible gift recipient (DGR)' status from the ATO if you intend to claim a tax benefit.
Gather up your receipts
Depending on your circumstances, some expenses you’ve built up during the year could be used to claim a tax refund. So now is the time to start gathering your receipts and records together. Expenses you may be able to claim a deduction for in your end of year tax return include:
- Car expenses (fuel etc) if you use your vehicle for work.
- Home office expenses like office equipment, heating or cooling of your workspace.
- Investment property - if you rent a property or part of a property for income, some expenses like body corporate fees could be claimed back.
If you’re looking for some extra guidance to help you make the most of your finances this end of financial year, a meeting with a financial planner could help. We partner with the experts at Bridges, and your first consultation with them is complimentary and obligation free.
Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837. This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent. Examples are illustrative only and are subject to the assumptions and qualifications disclosed. Part of the IOOF group. In referring customers to Bridges, Great Southern Bank does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives.