As the financial year draws to a close, it's the perfect time to review your financial affairs and set the stage for a successful new financial year.
By taking care of essential tasks and implementing strategic planning, you’re setting yourself up for a smooth transition and a strong start for the new year, helping you connect with your true potential.
Topping up super
One important item to consider adding to your ‘to-do’ list is to top up your super with either concessional (pre-tax) or non-concessional (post-tax) contributions.
For example, you could make a voluntary concessional contribution up to the limit allowed and then claim a tax deduction on your personal assessable income for it.
Consider making additional contributions to your own super account or your spouse's account to take advantage of tax concessions.
If you have unused concessional cap amounts from the previous five years and a super balance of less than $500,000 on June 30 of the previous year, you may be eligible to make a catch-up (or carry-forward) contribution greater than the annual limit.
Maximising contributions not only helps you build your retirement savings but can also provide valuable tax benefits. It’s important to be mindful of your caps and to ensure that you make any super contributions before the end of the financial year to meet the deadline.
Reviewing investments
Reviewing your investment portfolio is valuable at any time – particularly now. For example, you could examine any capital gains or losses that could be used strategically to manage your tax liability.
It’s also worth considering how your portfolio performed over the past 12 months against your goal of capital growth, income, or balance.
You may decide to readjust your goals or your investments to help steer performance in the right direction for the next 12 months.
Paying expenses early
Another useful strategy for tax time can be to bring forward any deductible expenses or interest payments before 30 June to reduce your taxable income.
That could include incurring expenses on an investment property, prepaying interest on investment loans, making charitable donations, or claiming eligible work-related expenses.
Make sure you keep detailed records and receipts to support your deductions.
The ATO’s myDeductions app is a great place to start for free record keeping and to help you prepare for tax time.
Setting up salary sacrifice
As you look ahead to the new financial year, consider whether a salary sacrifice arrangement might be right for you.
Salary sacrifice allows you to divert a portion of your pre-tax salary directly into your superannuation, effectively reducing your taxable income and boosting your retirement savings.
You will need to consider your living expenses carefully to work out the amount you can afford to contribute to your super. To avoid paying any extra tax, you must not exceed your concessional (before-tax) contributions cap of $27,500 (which will increase to $30,000 from July 1, 2024).
Your employer or payroll department can help you set up a salary sacrifice arrangement.
Checking your budget
This is a good time to revisit your financial goals and how you’re tracking them. Putting together a strong budget for the new financial year helps you continue to navigate and achieve your financial goals.
Take the time to review your income and expenses and identify any areas where you can cut back spending or improve your income.
This exercise not only helps you understand your financial habits but also allows you to reallocate funds towards your goals, such as paying down debt, building an emergency fund, or increasing your investment contributions.
Next steps
If you’re planning any financial changes, it’s important to seek professional advice to ensure that you're making informed decisions about your investments.
Connect with your local Nexia Adviser to ensure that you’re taking advantage of any opportunities for financial growth and maximising your tax savings.