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Some (Financial) New Year’s Resolutions

Analaura Luna Happy New Year! Well – almost. There’s a while to go before the calendar year runs out, but the financial year comes to a close on 30 June. Unlike New Year’s Eve, you may not think of the end of the financial year as a time to break out the bubbly and put up the brightly coloured banners, but while it may not be a good excuse for wild, all-night parties and regrettable hangovers, Financial New Year is a good time to make resolutions – of the money management variety. It’s always a good idea to look out for ways to improve your financial position, but the end of the financial year gives you a unique opportunity to implement strategies that will help build your wealth and secure your financial future. It’s important that you see your financial adviser before making any decisions, but it never hurts to know all the options. Read on to find out how you can take advantage of the end of the financial year to make your money do more for you, and make your Financial New Year a profitable one!

Making tax work in your favour
Paying taxes is a normal part of a successful working life, but that doesn’t mean you shouldn’t make the most of the tax strategies available to you. This is a great time to look into some options for reducing your taxable income, increasing your deductions and getting those other tax issues untangled!

• Talk to your financial adviser about selling off investments that are performing poorly in order to create a capital loss. This can be a great strategy for reducing your tax and freeing up money to make new investments, but remember that most investments are for the long term and shouldn’t necessarily be abandoned due to short-term losses.

• If you’re considering selling any profitable assets, talk to your adviser about delaying the sale until next financial year so you can defer any capital gains tax you may need to pay.

Paying in advance is another great strategy you can use to bring tax deductions forward to this financial year, which can reduce the amount of income tax you have to pay.

If you have income protection insurance (and you should!), you can take advantage of paying your premiums 12 months in advance.

If you’ve got a geared investment portfolio, also consider paying any interest on your investment loan in advance.

Bulk up your super
Saving the amount you need for a comfortable retirement can sometimes seem pretty daunting, so it’s good to know that the end of the financial year gives you a chance to significantly increase your fund – and reduce the amount of tax you’ll have to pay even further by funnelling some of your income into your super.

• Think about investing any bonuses you receive in your super – you may be able to reduce the amount of tax you need to pay on them by up to 31.5 per cent.

• If your annual income is less than $61 920, you may be eligible for a government co-contribution of up to $1 000 if you make an after-tax contribution to your super. You will have to meet some criteria to qualify though, so check with your financial adviser to see whether this is the best option for you.

• If you earn less than $13 800 a year your spouse can make a contribution for you, which can result in them receiving a tax offset of up to $540.

• If you’re self-employed or unemployed you may be able to claim any investment you make into your super fund as a tax deduction. This also applies to contributions made from the sale of assets, provided you earn less than ten per cent of your income from regular employment.
  

The end of the financial year may not be quite as exciting as December 31, but it does give you the opportunity to make some important money management choices that can make a big difference to your financial position. And that is a good reason to break out the bubbly!

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Tags:money management advice, end of financial year, financial advice

Author's Biography

Analaura Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.