Pete Pennicott of Melbourne-based financial advisory firm Pekada said there are several factors that ensnare taxpayers at the end of a financial year which leave them needlessly out of pocket.
“There are so many tax-effective strategies for individuals to optimise their personal finances, but too often we see these opportunities slip through the cracks due to poor preparation and a general lack of awareness of what they can do,” he said.
Spending just for the deduction
One of these comes to the notion of partaking in tax-time sales in order to claim deductions. According to Mr Pennicott, this often leads to excessive spending.
“Too many people suffer from a rush of blood and go on a spending spree to take advantage of last-minute deductible purchases, [but] there is no point spending money just for a deduction, as you are spending dollars to get cents back,” he said.
“Be smart with surplus cash and consider tax-effective investment strategies or super contributions which grow your wealth instead of spending it.”
Another trap can be superannuation, and not taking advantage of some of the associated tax breaks.
“It sometimes gets a bad wrap as the goal posts keep changing, but superannuation is and will likely remain the best place to compound your investment returns,” Mr Pennicott said.
“The concessional tax treatment on some contributions and the investment returns translate to bigger returns long-term.
“It isn’t always the right fit but is worth exploring even for younger accumulators who have time on their side to let the magic of compound interest do the heavy lifting.”
The final factor, said Mr Pennicott, is a simple yet important one.
“Get prepared and start planning as early as possible,” he said.
“EOFY comes around at the same time each year, so there is no excuse for poor planning.
“Timing is everything and a transaction falling either side of June 30 can cost you big dollars.”
Take advantage of rebates
Meanwhile, printing solutions provider Konica Minolta has urged SMEs to seek out whether they are eligible for rebates on important asset purchases.
“At the end of the financial year, there are lots of tax rebates and other benefits for businesses investing in assets,” it said in a statement.
“So, it’s important for business owners to speak with their tax adviser regarding what’s available to their business.”