Prepare yourself for a very COVID EOFY
Australian Bureau of Statistics (ABS) figures show that overall monthly retail turnover fell by 17.9% during April. This is the steepest monthly fall on record and illustrates how hard people’s spending power has been hit by the COVID-19 pandemic.
If you are one of those people that has suffered financial hardship, the end of financial year – otherwise known as EOFY – presents the perfect opportunity to put your finances in order and find ways to save money.
But where do you start?
- Let’s start with the sales
If you do have a compulsion to buy something, make it count. Literally.
Go shopping for items that could be tax deductible. You only have a couple of weeks left to claim these types of items before the 30 June tax year cut off, so get cracking. You may even find them on sale, which will give you a double hit of solid financial management.
If you are working from home, think about what you might need from a work perspective. It could be a great time to buy a new desk, lamp, computer or any software required to help you perform your job efficiently and to expectation.
These items are claimable if you require them to do your job. So, make a list check it twice, ensure the claim is legitimate and then make it part of your tax return.
It is the best time of the year to get money back on your purchases and you still support the economy by doing so.
- Do your tax return
It’s time to get your tax affairs in order and book an accountant if you have or need one.
Tax time is a little different this year. Remember, this is the year of the 80 cents per hour rule, which means the ATO is allowing people to claim a rate of 80 cents per work hour during the coronavirus crisis.
You must still keep a record of hours worked due to COVID-19 and if you use this rule, you have to stick with it and use it for all deductions.
That said, you are pretty much guaranteed to receive a refund.
You can read our full coverage of 2020 tax related matters here.
- Sort out your health insurance
If you are 31 years of age, you have until 30 June to avoid the 1 July Lifetime Health Cover Loading deadline.
That’s over 380,000 of you.
Lifetime health cover (LHC) was implemented by the Federal government to encourage you to purchase and maintain private patient hospital cover earlier in life.
By failing to take out LHC from the year you turn 31, you will pay a 2% LHC loading on top of your premium for every year you are aged over 30.
The ATO provides the following harsh example: “if you take out private patient hospital cover when you are 40 years old, you could pay an extra 20% on the cost of this cover per year for 10 years. If you wait until you are 50 years old, you could pay 40% more per year for 10 years. The maximum LHC loading that can be applied is 70%. Once you have paid LHC loading for 10 years of continuous cover, you will no longer have to pay this loading.”
- Do a financial audit
What a great time of year to conduct a financial audit to get your affairs in order.
Firstly, you should review whether you met your financial targets this financial year. If you don’t have targets set some for the next financial year. What you can do differently to save money or make money. A good place to start is to use the InfoChoice Budget Planner to determine your income versus expenses.
There are plenty of savings to be made if know what you want, where to