- It’s the beginning of a new year – a new financial year that is! Get your finances in order at the start of the year and reap the rewards at the end. Check out these 17 bright ideas of things to consider for the start of the financial year containing tips for individual’s families and small businesses. Most of all have a Happy New Year!
- Author: David Prichard is a Partner is a Partner with ESV Chartered Accountants. He can be contacted on (02) 9275 0249.
Finish your Budget and Set Realistic Financial Goals for the Year –The start of the financial year is a great time to complete your yearly budget if you have not already done so. Check out the family budget template in our 17 bright templates if you need some help with your family budget. Make sure your financial goals are realistic, achievable and specific.
Assess Your Superannuation Requirements – The start of the financial year is a good time to assess whether you are contributing enough to super to meet your future requirements. The Industry Fund Services website http://ifs.net.au/superannuation/learn-about-super/is-my-super-on-track/ has a good calculator on it to help you assess what super you will need in the future.
Audit – If your small business or your Self Managed Super Fund (SMSF) needs auditing, if you haven’t already done so, its time to call the auditor. I can guarantee you we are all very friendly and it won’t be as you think!
Insurance – the beginning of the financial year is a great time to assess all your insurance needs. Do you have enough? Can you get a better deal? In particular have a look at your Health Insurance. If you earn over $88K (single) or $188k (married) you may have to pay the Medicare levy surcharge if you don’t have insurance. Also if don’t have private health cover after 1 July after your 31st birthday you will need to pay the Lifetime Health Cover Loading on any hospital cover you pay from that point forward.
Look Back and Reflect– Review your financial results from the previous year. What worked for you and what didn’t? Learn from your mistakes and congratulate yourself on your achievements!
Superannuation Guarantee increases from 9% to 9.25% – From 1 July 2013 employers need to pay super at an increased rate of 9.25%. Have you considered the impact on yours staff’s take home pay or will your salary budget be higher?
Operating Structure – Review your operating structure and make sure it is the right one for you. Have your circumstances changed since you last reviewed your structure? Have the applicable laws changed such that a different structure might be more applicable? Don’t be afraid to consult an expert to assist.
Will – Do your will if you have not done so already. If you die without a will, or without a properly executed will, the court will appoint an administrator to look after your assets and apportion them to relatives in accordance with a pre determined formula. If running a small business what is your succession plan?
Debt – The beginning of the financial year is a great time to review your debt structuring. Why not consider refinancing to secure a better rate. Put plans in place to pay off bad debt (non-deductible debt) prior to paying off good debt (deductible debt) where possible.
Scrapped Family Tax Benefit Increases (Individuals) –“ The Government has announced that it will not proceed with its 2012-13 Budget proposal to provide $1.8bn in funding over 4 years to increase the maximum payment rate of Family Tax Benefit (FTB) Part A by $300 pa for families with one child and $600 pa for families with 2 or more children. For families receiving the base rate of FTB Part A, the increase would have been $100 pa for families with one child and $200 pa for families with 2 or more children. The increased FTB was to have come into effect from 1 July 2013” Source: Institute of Public Accounts Budget update 2013.
Baby Bonus (Individuals) –“ Baby Bonus has changed for children who are born or adopted on or after 1 July 2013. Baby Bonus is now $5,000 if the child you are claiming for is your first child or $3,000 if they are not your first child”. Source: http://www.humanservices.gov.au/customer/services/centrelink/baby-bonusFrom 1 April 2014 the baby bonus will be abolished.
National Disability Insurance Scheme Starts (Individuals) – If you think you may be eligible check out the disabilitycareaustralia.gov.au website. From 1 July 2013, Disability Care Australia begins in Tasmania for young people aged 15-24, in South Australia for children aged 0-14, and in the Barwon area of Victoria and the Hunter area in NSW for people up to age 65. Source: http://www.disabilitycareaustralia.gov.au/roll-out-disabilitycare-australia
Additional Deductions for Vehicles Purchases (Small Business) – Small businesses (turnover <$2m) can now claim an additional $5,000 in the income year of purchase of a new car. This effectively brings forward the income deduction.
Increased Asset Write Off Threshold (Small Business) – The asset write off threshold for small businesses has been increased from $1,000 to $6,500. This change is applicable from 1 July 2013 and is applicable to small businesses with an aggregated turnover of less than $2m. The ATO are trying to make things simpler for small businesses!
Removal of Entrepreneurs Tax Offset (Small Business) – Small businesses with an annual turnover of <$75,000 could previously claim a 25% reduction is tax. Unfortunately this has now been removed.
Risk Review (Small Business) – The beginning of the financial year is a great time for you to perform a risk review of your small business. Where are you exposed? What mitigating factors do you have in place to minimize your main risks? Its hard to find time for the high level work when you are bogged down in day to day operations but the beginning of the financial year is a good time to stand back and take a holistic view.
Loss carry back provisions (Small Business) – New arrangements provide an option for companies to carry back all or part of a tax loss to the previous income year to reduce their taxable income.