EOFY brings multiple opportunities for employees and small business owners alike. Whilst some people groan at the thought of tax time (and all the paperwork that comes with it), others celebrate the rewarding perks. And boy, there’s a few!
The end of financial year is a crucial time for business owners to get their expenses in order. But with multiple sales popping up on TV, online and stores, there are also some exciting (and fun) financial benefits to be had. From snagging great deals on new cars, taking advantage of tax-deductible expenses, boosting your superannuation and designer and work wear bargains, EOFY is a modern-day consumer’s dream. Here are some perks you should know about:
Jump on Board with EOFY Sales
Shopping EOFY sales may feel like a nightmare with the crowds, but it’s one of the smartest times to benefit from great prices. You get a double whammy if you go shopping here – the pleasure of grabbing some great new things, coupled with reducing your tax bill for the ATO if you shop smartly.
If you run your own business, find out what you can legally claim as a tax deduction. This will depend on the type of business you run and the necessities required. EOFY is the biggest sale period for buying a new car too, whether it be for business, personal use or both. Use this valuable shopping time to stock up on home office expenses, work wear, homeware items and more.
Gain Positive Tax Savings through a Novated Lease
Novated leases come with some seriously great tax perks. These salary packaging arrangements, which enable you to purchase a car and all the running costs out of your pre-tax and post-tax salary, are considered the last decent tax break for employees. Because all the car’s expenses are paid directly from your payroll, your taxable income is significantly reduced. And with the tightening of concessional pre-tax super (and the hefty costs of running and maintaining a car), this is a huge positive for many of us.
Take Advantage of Tax-Deductible Donations
Charity donations aren’t just great for the organization you’re supporting, but they can be deducted from your tax return too. Whilst your primary motivation for donating should be altruism, the tax benefits that come with it are definitely some worth mentioning.
To be entitled to deductions, the chosen charity must be qualified. These donations can then be itemized as standard charity gifts when it comes to completing your tax return. There are limits to how much you can deduct, but they’re very high, so you only need to be concerned about them if you’re contributing more than 20% of your income to charity.
Invest Additional Money into Super
Contributing to our superannuation funds isn’t something many do. It’s ironic, actually, because we rely on this payout to fund our retirement income, so wouldn’t it make sense to make additional payments along the way? Fewer than one in ten Aussies are investing into their super accounts. And that means the majority of us are missing out on the government incentives!
Whilst there are caps on how much you can pay each financial year (before you’ll be charged extra tax), personal contributions can be claimed as a tax deduction. These payments must be made from your after-tax pay, however. You can also lower your super contribution tax rate by setting up a salary sacrifice arrangement with your employer. These contributions won’t be included as a tax deduction, but they encourage a healthier payout to come retirement too.
Pre-Pay Insurance Premiums
If you have income protection insurance, prepaying your insurance premium for the coming 12 months will allow you to claim a tax deduction for the current financial year, rather than the next one. Most people pay their insurance on a month-to-month basis. And whilst it can seem like an expensive mission to prepay the upcoming year instead, the tax incentives make the tax return a very beneficial one.
Tax time isn’t just about shopping sprees, although they can be rewarding! There are multiple financial encouragements that can set you up for a new financial year, boost your business and initiate better savings. Which ones will you be taking advantage?