Thursday, 26 June 2014

It's Tax Time: Here are 4 things you should do before 30 June

Can you believe the end of the financial and tax year is already here?  It seems to come around quicker every single year! You have just a few days left to get your some last minute tax structuring done before the year comes to an end so I have compiled a list of things that you may want to consider doing.

Here are 4 things you should think about before the end of the financial year:

1. Calculate your capital gains tax bill and work out if you need to trade

You should be doing this at the end of every financial year.  I have posted about this idea in far more detail but here are the basics
  • You can't offset your capital gains tax losses / gains against your other income (as you can with your investment property)
  • If you have a tax gain or loss you can net it off with another position that you may want to exit 
  • If you have a CGT liability for the year and have unrealised tax losses you can realise the tax loss and then re-enter the position again in the new financial year
    • Note that this creates a new tax base and transaction costs but it may be worth it due to the time value of money

2. Donate to charity before the end of the financial year

If you have been thinking about donating to charity now is a great time to do it.  The charity is probably going to be indifferent between receiving it now or in 5 days time but you get the tax benefit this year instead of next year.

Don't forget that in order to do this you have to have a tax receipt!

3. Work out if you can front end any tax deductible expenses

Do you have tax deductible expenses that you are planning to make?  Perhaps it is salary sacrificing into superannuation or perhaps you need to do some repairs on your investment property or get a depreciation report for your investment property.  

If you have an expenditure which is tax deductible you should think about making these expenditures (or pre-paying these expenditures) before the end of the financial year.  Again this has to do with the time value of money (i.e. a tax deduction now is worth more to you than a tax deduction in a years time).

4. If you are over turning 31 or are already 31 and don't have health insurance consider getting cover

I recently did a post on the Lifetime Health Cover loading which applies if you don't have health insurance by the 30th of June after your 31st birthday.  It really is quite a big stick and if you are thinking about getting health insurance at any point in your life you should be aware of the implications of the LHC loading.

If you're already over 31 keep in mind that the longer you wait the more you are going to get hit when you eventually decide to take cover.  So if you have turned 31 this year or are above 31 consider taking out health insurance before the end of the financial year.

Save time, save money and make your life simpler at tax time

Getting your financial affairs in order before the end of the tax year can save you time, money and make your life simpler when it comes to tax time.  This year I have made sure that my financial affairs were in order well ahead of time so that I could fire my accountant and do my own taxes.

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  1. Awesome tips, donating to charity at any time of year is great but to get it in before the end of financial year is a good one!!

    I'll be offline for 5 weeks now but looking forward to reconnecting upon my return :)

    Cheers and keep blogging

    1. Thanks Jef! There are so many things to do before the end of tax time that it is often hard to get it all in. Hope you managed to get everything done before you left