1.Buy Health Insurance Before July 1
Ideally, you will have already pre – purchased 12 months worth of health insurance before April 1 – which is the annual opportunity for insurers to increase their premiums – By pre purchasing then, you would have had the benefit of 12 months insurance at the old rate. By pre purchasing now, if you are under 31 on July 1, you avoid the Lifetime Health Cover loading altogether. If you are over 31, you avoid further 2 percent annual increases on your health cover. LHC is a government initiative introduced in 2000 that is designed to encourage individuals to take out health cover by the time they are 30. Every July 1 after your 31 st birthday that you don’t have health insurance increases the amount you will have to pay by 2 percent if you decide to take out health insurance.
2. Delay Income If You Are A Cash Based Business
Depending on the accounting system your business uses, you can reduce your taxable income by delaying the receipt of income until the new financial year. Accrual accounting counts income when it is earned, while cash accounting counts income when it’s received, so if you are a cash based business , make invoice due dates after July 1 and you won’t have as much income to declare.
3. Pay Your Bills By June 30
This is the opposite of delaying income. By paying bills in this financial year, even if the due date isn’t until after the end of June, you will increase your deductible business expenses for 2015 – 2016 and reduce your taxable income. While individuals don’t have the same range of allowable deductions as businesses, the same principle applies.
4. Make Deductable Purchases By June 30
This is more of an extension of paying your bills than a separate point but it is important to understand that if you are considering any major purchases in the coming months, it is worth getting organised now so you can either deduct the full purchase now or get the first portion or depreciation in for more expensive items.
5. Understand Your Income And Expenses
Your income can potentially include a lot more than just your fortnightly pay packet. Bank interest on savings accounts will count as income, as will share dividends – any profits you have made through buying and selling shares will be taxed as a capital gain, so you need to allow for that too – Positively geared properties will also need to be recorded as income. The flip side of this income is that interest and professional fees relating to this income can be prepaid before July 1 so you can claim it as a tax deduction. This applies to both businesses and individuals earning income.
6. Organise Your Records
Whether you are an employee or a business owner, it is a good idea to get your records in order for the end of financial year just in case the tax office decides to do an audit. While you don’t require proof of deductions under a certain value, it can be difficult to know in advance whether your deductions will remain under those thresholds, so it is wise to retain all your records just in case.
7. Prepare A Budget For Next Financial Year
While this isn’t a vital component of your end of financial year preparations, it should be a key focus for both individuals and businesses heading into the new financial year. One of the main causes of personal financial hardship and business failure is a clear lack of clear financial goals. While financial preparations can be done at any time of year, adding them in to your tax preparations will ensure they are done on a regular basis. From the second year on you will be able to compare your past year’s goals against your actual records for the year.