8 ways to get organised in the new financial year

8 ways to get organised in the new financial year

There are some dates you always remember: Birthdays, public holidays, and when the in-laws are coming to visit. However, there are some that escape many Australians — including the end of the financial year. This ticks over at the beginning of the month, meaning it’s time for many people to file their returns and hopefully end up with some extra cash in their savings account.

It’s a time when you can also capitalise on a great deal of deductions, depending on your situation. To make sure you’re prepared next time around, and to start this new financial year on the right foot, here are eight tips to keep in mind. 

1) You can always do it online

Doing your taxes doesn’t have to be a strenuous or time consuming task. With services like the Australian Taxation Office’s (ATO) myTax system, accessible from a number of mobile devices, you can get yourself up to speed and up to scratch with a swipe of the finger of the touch of a button.

2) Don’t skimp on the details

Whenever you’re dealing with your taxes, make a list and check it twice. Perhaps even three or 30 times. The ATO deals with more than 350,000 tax returns each year that have errors, from misspelled names to incorrect income details — some people even do their return more than once. These all put a hold on the system and your clean bill of tax health. 

3) Work out your work costs

There are many tax breaks available to Australians, giving you more cash in hand when all is said and done. Work-related expenses like petrol, dry-cleaning and even SMSF contributions can be deductible, as can the upkeep of a home office. As long as the costs were for work purposes rather than private gain, you should be able to claim it. However…

4) Leave a paper trail

You can’t make deduction claims without the right paperwork. This includes proof of travel costs like receipts, and any paperwork that had to be filled out for insurance, registration, applications for any work-related programmes and the like. Keep these organised and safe for a smooth taxation process.

5) Claim the big things

On top of claiming expenses from your job, any rental properties you own can be an excellent source of deductions, which is great news for those making home loan repayments. Maintenance of this real estate costs time and money — funds you can claim back. Lawnmower petrol, water charges, agent fees and the like all come under this umbrella — research what you could claim! And as always, keep tidy records.

6) Get back in business

Any self-employed Australians or small business owners will have relished the announcements in the federal budget regarding taxation, with the company tax going down for businesses that have less than $2 million in annual turnover. If you’ve been considering starting up your own company, make sure you understand the benefits available. 

7) Check your gear

Another one for business owners — and what a boost it is! The budget also now allows for equipment purchases up to $20,000 to be eligible for deduction. Previously, the threshold was only $1,000. This means equipment, furniture, software and the like that is bought for your company can see you make significant savings at tax time.

As a recent development, this is one that many can look forward to for next year. Don’t throw those receipts out!

8) Don’t be late

Now that the financial year has ended and been reborn, it’s time to start planning all of your potential deductions and paperwork. You have until October 31 to get this organised — whether you use a tax agent or do it yourself, make sure you do it right. Nobody wants to get caught up in red tape, and there are now so many financial windfalls you can receive that you’d be crazy not to be organised! 

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How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

What is a good interest rate for a savings account?

A good rule of thumb to keep in mind with savings accounts is to look for a rate that is higher than the CPI inflation rate. This number is constantly changing, so check the Reserve Bank of Australia’s page. If you aren’t earning interest above this then the value of your money will go backwards over time.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.