Friday, 31 May 2013

Only 1 month left until the end of the financial year! Are you ready?

Any readers that happened to be reading my blog around this time last year would know how excited I get around tax time.  Before you ask....I can assure you that a) Yes...I have a life and b) No...I am not nuts.

There are a few reasons that I love this time of the year including

  1. Getting my income tax refund
    • Like all sane people, I realise that my taxes are necessary to fund those things in society which can only be provided by a government, however that does not mean that I can't grumble about how much I pay in tax
    • Due to my investment property I get an income tax refund every year and it is very nice getting this back from the government
  2. I can justify big expenses on tax deductible items
    • I am a little bit of a technology geek and I love buying new gadgets - however given I also am trying to save money I have been having a hard time justifying this expenditure
    • However if you are planning on buying an item that you can tax deduct (e.g. a laptop) then you have to do this before the end of the financial year (note that I'm planning on claiming my Nexus 7 as I use it for work purposes)
Most of us only start thinking about our taxes after then end of the financial year...this is silly...

It makes much more sense to start thinking about it much earlier.  There is now exactly 1 month left before the end of the financial year which should be plenty of time to think about how to maximise the
benefits you get this financial year instead of putting it off until June 2014.  Things you should do include:
  1. Work out if you have a capital gains liability at the end of the financial year
    • If you do, it may make sense to trade out of a stock that you currently have a loss making position in so that you do not have to pay capital gains tax in the financial year
      • I was thinking about doing this recently however the recent pull back in the share market means the shares I was thinking about exiting completely are now much lower than they were just 2 weeks ago...I may wait to see where they end up
    • A capital loss position is not as big a deal because you can roll this forward
  2. Work out what you can buy to tax deduct in this financial year
    • This can include goods and services
    • I mentioned laptops above but if you need to do maintenance work on an investment property or if you have your own small business and you want to buy some materials...this is probably a great time to do it
  3. This is also a great time to make donations
    • I have written before about how tax effective donations are
    • If you make lump sum donations (instead of regular payments) then consider making them now - you will get your tax deduction much sooner than if you wait for the following year
This is all stuff you can do yourself...

You only really need to go and see an accountant when you are filing your tax returns - but this is a great time to get your own financial affairs in order so that you know where you can benefit.

Do you start thinking about your taxes this early?  How are you starting to prepare?

You May Also Be Interested In:

No comments:

Post a comment