Guide to EOFYS

EOFY: End of Financial Year 2018

With the end of financial year fast approaching, now is the time to get all your finances in order.

The end of the financial year is getting closer by the minute. Not only does this mean a host of sales as retailers try to offload stock, but also time to submit your tax return. The end of a financial year is also the perfect time to get your finances in order and ensure you get the best possible tax return, so read on to find out how to survive the end of the financial year.

How to use a credit card during EOFY

At this time of year it can often be hard not to be seduced by the savings and discounts offered in end of financial year sales. However, splurging out on a few bargain purchases with your credit card can quickly see you get in over your head as interest charges start to add up.

A great tip for this time of year is to use a credit card with an introductory rate on purchases. Some cards offer a 0% p.a. interest rate for an introductory period, while others will offer a very low rate for a certain time frame. As long as you can be sure of paying off your balance before the introductory period ends, you shouldn’t have a problem. Of course, if you plan on keeping the credit card for longer than this period, make sure you take into account the regular features that will apply when the promotional period expires.

Comparison of 0% p.a. Purchase Rate Credit Cards

Rates last updated July 20th, 2018
$
Name Product Product Description Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Interest Free Period Amount Saved
Virgin Australia Velocity Flyer Card - 0% Interest Offer
Buy now and pay later with 0% p.a. interest on purchases for 14 months. Plus, 0% p.a. on balance transfers for up to 6 months.
0% p.a. for 14 months (reverts to 20.74% p.a.)
0% p.a. for 6 months
$129 p.a.
Up to 44 days on purchases
NAB Low Rate Platinum Card
Enjoy a 0% p.a. interest rate offer on purchases for 9 months and the protection of 7 complimentary insurances including overseas travel insurance.
0% p.a. for 9 months (reverts to 13.99% p.a.)
0% p.a. for 6 months with 2% balance transfer fee
$100 p.a.
Up to 55 days on purchases
NAB Low Rate Credit Card
Receive an introductory 0% p.a. interest rate for 6 months on purchases, Visa Entertainment offers and a competitive $59 ongoing annual fee.
0% p.a. for 6 months (reverts to 13.99% p.a.)
0% p.a. for 6 months with 2% balance transfer fee
$59 p.a.
Up to 55 days on purchases

Compare up to 4 providers

Another handy tip is to use your tax return to pay off any credit card debt you may have. Rather than using the cash you receive to fund more purchases, use it to pay off your debts and get your financial situation back on track.

Superannuation contributions

Superannuation Contributions

With the end of financial year coming up, you might want to consider making a tax-deductible super contribution. If you less than 10 per cent of your income is derived from eligible employment, for example if you are self employed or simply don’t have a job, contributing to your super account can be a wise financial decision. This allows you to save on the amount of tax you will have to pay by maxing ‘after-tax’ contributions, plus you can make contributions of up to $25,000 in this financial year and greatly increase your super balance.

If you’re an employee, it’s a good idea to sacrifice your pre-tax salary straight into your super account. This can greatly reduce the amount of tax you have to pay on your salary and obviously also help build your super account.

Deferring income

For businesses, while it’s generally a good idea to claim deductions as soon as possible, the usual rule is to defer income to the following financial year. Taking this step will obviously reduce the amount of tax you’ll have to pay for this financial year and could also let you take advantage of any proposed future tax cuts.

Deferring your income to future tax years can also be a viable option for individuals, again allowing you the possibility of taking advantage of tax cuts.

Government co-contributions

Government co-contributions

Though many people aren’t aware of it, they’re actually eligible for government co-contributions to superannuation. If you earn less than $48,516 per year, 10 per cent of which must be from employment or a business, the Australian government will match a certain amount of your after-tax super contributions up to a total of $500. The contribution you receive from the government is entirely tax-free.

You’ll need to be a permanent Australian resident or citizen during the financial year in question and must be less than 71 years of age. Taking advantage of this government offering is a great way to save money for your retirement, ensuring you have enough funds to get by when you are no longer earning an income.

Reduce tax further

How to reduce tax even further

There are a number of other steps you can take before the end of the financial year to further reduce the amount of tax you will have to pay. The first place to start is with investments. If you have an investment in your name, it may be a wise financial move to cash out that investment and then use the resulting cash to make an after-tax super contribution. As above, this not only helps build your retirement savings but also lessens the amount of tax you will have to pay.

Another option you can consider is contributing to your spouse’s super. If you are earning more than your partner and would like to top up their retirement savings, you could be eligible for a tax break. Conditions do apply, of course, so you’ll need to assess your own financial situation before deciding whether this is a viable option for you.

If you have income protection insurance cover, you might want to pre-pay your premiums 12 months in advance to take advantage of a tax deduction. Some people can benefit from tax concessions for taking out life or TPD cover through their super, while pre-paying investment loan interest can also help you pay less tax.

Finally, if your investments have resulted in capital gains, consider selling a poorly performing investment to use your capital loss to offset the taxable capital gain.

EOFYS Shopping and Savings

End of Financial year also means that many retailers are looking to offload excess stock at reduced prices. Remember to shop around and compare the savings you can get from each retailer. Shopping online can be a great way to save money and it also means you don't have to deal with the masses of people who often flock to these events.

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More tips to help you prepare for EOFY

  • Get organised. How often do you end up struggling to find important documents, receipts and the like when tax time rolls around? Do yourself and your accountant a favour and set up a simple, organised filing system well in advance. This will save you both time and stress.
  • Research your options. Do you know what you can claim deductions for? Is the Australian Tax Office (ATO) introducing changes that you could benefit from? A little bit of research can go a long way when it comes to the amount of money you get back.
  • Make a list. To help get organised it can be a good idea to create a checklist of all the documents you’ll need. This can include PAYG and bank statements, dividend statements, private health insurance statements, plus the all-important receipts for everything from work expenses to charitable donations.
  • Business matters. Business owners need to organise all receipts and records before tax time rolls around. Calculating your income and expenses is a must, and the use of business accounting software can make this task a whole lot easier.

With a little bit of preparation and some simple research, you can save yourself a whole lot of time and money at tax time. For more information on getting the most out of the end of the financial year, speak to your accountant.

Jeremy Cabral

Jeremy is a publisher for finder.com.au, he is also a personal finance all-rounder specialising in: Credit Cards, Savings Accounts, Personal Loans, Home Loans & Online Shopping.

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