As this year quickly races past our eyes we may have lost sight of those little or big goals we set for ourselves at the start of the year. Often we begin the New Year fresh, motivated and ready to make the next year the best one yet and although this is great, sometimes we lose sight or get off track of our goals we
had in set.
Sometimes a mid year “detox” is the perfect way to recharge, recuperate and get back on track to
smash out your end of year goals.
Now here at The Wealth Genie we’re predominately focused on financial success and freedom so I’m not just talking about any old detox. No juice detox or lemon water craze. We’re talking “a spending detox”.
I have created five tips to get your back on track of your financial goals and right into a spending detox.
Now because it’s a detox it’s not forever! (That wouldn’t be sustainable) Choose a week (or a month if your game) and get back down to the basics. Not only can a spending detox help you get back onto this years goals it can give you a new appreciation for your money and recognize some bad habits you may have formed.
The spending detox
1. Get back to the goal
First of all it’s important to remember and refresh what your financial goals were and why you were striving for them. Write them down and get motivated again!
2. Cut out all unnecessary shopping
For the period of your detox no sneaky online spends or picking up a cute top after work on Friday. Just for this one-week (or month) only spend money on things you desperately need. The shoes don’t count!
3. Get rid of your debt
Obviously a lot easier said then done but carrying credit card debt is so harmful to financial health and tends to be a huge deterrence in reaching goals. Try making double or triple the repayment this week, bringing you closer to having the debt paid off.
4. Identify where you got off track
Looking back and reflecting on exactly what you were excessively spending your money on and where you went wrong is vital in not doing it again. Identify where you could have not spent as much money and come up with a plan of how to not make the same mistakes in the future!
5. Swap this for that
Going out for dinner, weekends away and treating ourselves to those lovely massages can really make a dint in the spending budget. While all of those things are lovely and should be enjoyed on the spending detox they just wont’ do. Swap going out for dinner with a special home cooked meal, put a candle and some music on and you’re in a make shift five star restaurants!
Think of a spending detox like any other detox! While it’s not exactly that enjoyable in the process, the end result will have you feeling lighter, refreshed and motivated!
- The Wealth Genie
With tax return just around the corner (crazy, I know. Where did the year go?!) We thought it would be fitting to give our best tips to maximize your tax return this year or next!
If you’re someone who always watches all your friends take in large tax returns and you seem to get little to nothing, then this article is for you!
Although quickly approaching (June 30th), there’s still time!
1. Maximize depreciation deductions
Small businesses with an total annual turnover of less than $10 million can still receive an immediate tax deduction for nearly all individual assets purchased by 30 June 2018 that cost less than $20,000 that are used in your business.
If you are registered for GST, the amount is less the GST, but if you are not the total is taken to include the GST.
2. Claim deductions for a home office
If you’re constantly required to handle emails from home or have an agreement you’re completely entitled to claim a tax deduction for a percentage of this. Eg. The running of your cost and equipment.
3. Seek professional advice when starting a business
Professional expenses associated with starting a new business, such as legal and accounting fees, are deductible in the financial year those expenses are incurred rather than deductible over a five-year period as was the case previously.
If you established a business during the year, you should make sure you talk to us about claiming professional advice fees as an expense.
4. Consider whether your legal structure is right for your business
Small businesses are able to change their legal structure without incurring any income tax liability when active assets are transferred by one entity to another.
This rollover applies to active assets that are CGT assets, trading stock, revenue assets and depreciating assets used, or held ready for use, in the course of carrying on a business.
We can review your business structure to ensure it is appropriate for you and your business.
5. Review your private company loans
The income tax laws around loans made from private companies to directors and related parties are quite complex and if there are loans made from your private company you may need to review these prior to 30th June to make sure you are not at risk that these loans are considered unfranked dividends to shareholders or associates.
Depending on the circumstances, these strategies may include repaying a loan, declaring a dividend or entering a complying loan agreement.
In addition an unpaid distribution owed by a trust to a related private company beneficiary that arises on or after 1 July 2016 will be treated as a loan by the company, if the trustee and the company are controlled by the same family group. In these circumstances, the associated trust may be taken to have derived a deemed dividend for the amount of the unpaid trust distribution in 2017-18.
6. Write-off bad debts
If you have invoiced a client or customer and you are not going to receive payment for it you are able to claim a tax deduction for it in the year you decide to write off the debt. The invoice must previously been brought to account as income or sales.
7. Paying employee bonuses
If you pay your team bonuses and you want to bring expenses into the 2017-18 year, ensure they are quantified and documented in a properly authorized resolution (e.g. Board minute) prior to year-end to enable a deduction to be incurred for these bonuses where they are not paid or credited until the subsequent year.
8. Pay any outstanding superannuation entitlements
The Australian Government has announced a 12-month amnesty from 24 May 2018 for employers to pay any outstanding Superannuation Guarantee (SG) contributions for periods prior to 1 April 2018.
Employers who voluntarily disclose and pay previously undeclared SG shortfalls during the Amnesty and before an SG audit will not be liable for the administration penalties and will be able to claim a tax deduction for payments made during the 12-month period. The announcement is subject to approval by the Parliament. To able to claim the tax deduction in the 2017/18 Financial year these amounts must be paid by 30th June 2018.
Some specific tips for farmers:
7. Farm management deposits (FMDs)
One of the best tax-planning measures available to primary producers is effectively utilising the farm management deposits scheme, or FMDs. They are an effective business and cash flow planning tool.
Primary producers can deposit up to $800,000 in a FMD account, they can have early access to their FMD account during times of drought, and they may be able to offset the interest costs on primary production business debt.
Tax averaging enables primary producers to even out their income and tax payable over a maximum of five years to allow for good and bad years. This ensures that farmers don't pay more tax over time than taxpayers on comparable but steady incomes.
Primary producers who opted out of income tax averaging for 2006-07, or an earlier financial year, are able to choose to restart income tax averaging in 2017-18.
Hopefully these tips can assist you in getting the most from your tax return this year! Do not hesitate to contact The Wealth Genie for any financial advise and services!
- The Wealth Genie
Additional sources: https://thenewdaily.com.au/money/your-budget/2015/06/10/seven-tips-maximise-tax-return/?g
The media has been exploding with attention on the Royal Commission into the Banking and Financial Industries (Link here for more information). With all of this information bombarding the public, it's a little wonder people are skeptical about the big banks and their super funds.
Although somethings are simply out of our control, there are a few little things we can do to regain some power.
Here are 5 things you can do today to take control of your super:
1. Have a look at the Investment Option your super is currently invested in for you within your fund. You should make sure that it is in line with your Risk Profile and your time horizon until you can access your super money. Generally speaking the longer, you have until you can access your super (which for most under the age of 56 is 60 years old) the more aggressive you can be in your investment selections. What has grabbed the media’s attention is the amount of super money that has gone into what they call the default option, and while these vary between funds, it is generally what they call a Balanced Option which means that it is balanced between investing in Cash/ Fixed Interest and Growth Assets such as shares. This can have a huge impact on the total superannuation amount for a person who has 10 + years until retirement.
Say a balanced fund is returning 6% per annum as opposed to a High Growth fund (invested mainly in growth assets such as shares) which is returning 9% per annum. For a 30 year old earning $80,000 per annum and a starting balance of $20,000 in super the difference this makes is staggering:
After 30 years – Balanced Option, Super Balance is $946,626
High Growth Option, Super Balance is $1,618,772
That’s a whopping $672,146 difference!!
2. Check your fees on your account. As of the end of September 2017 all funds with the exception of Self Managed Superannuation Funds need to disclose all their costs, and you can find the costs for your own superfund in their Product Disclosure statements which are found on each funds website. The fees will not always be on your superannuation statement. There are also websites where you can check the fees and compare your superfund such as Canstar and SuperRatings.
3. Make sure your employer is paying your superannuation at least quarterly. We all assume that our employer will do the right thing but it isn’t always the case, so check your money is going into super when it should be and for the correct amount.
4. Check the Insurance on your fund. Many funds offer default insurance, which you pay for out of the fund. So check what you are paying for is what you need, or enough to meet your needs if a crisis arises.
5. Consider consolidating. If you have more than one fund it might be worth consolidating into the one fund to save on fees, but make sure that you have considered any insurance that might be a fund that you wish to close.As you will lose any insurance benefits if these funds are closed.
As always this is general advice only, and if you would like advice specific to your situation please seek advice from a professional adviser.
- The Wealth Genie
Michele Purvis is an advisor with over 30 years experience working in the accounting and financial services industry helping clients to define and create their wealth.