Liz Maroney, Westlawn Wealth Adviser Why women are better investorsBy Liz Maroney, Westlawn Wealth Adviser
27 June 2016

The end of financial year is fast approaching — which means it’s a good time to start planning your financial strategy for the year ahead.

For many of us, New Year’s Eve is the time when we make resolutions for the coming year — whether it’s committing to an exercise plan or learning a new language, or even just resolving to spend more time with family.

But when it comes to making resolutions about your finances, there’s no better time than the start of a new financial year. So if you’re looking to boost your super or reduce your tax bill, here are 3 resolutions you can make now to start next financial year on the right foot.

Resolution 1: I will start salary sacrificing

Salary sacrificing into super is a great way boost your retirement savings and also save on tax. If your employer agrees, you can ask them to take a fixed amount out of your pre-tax salary and pay it directly into your super. Since this strategy essentially lowers your income, it may reduce your tax liability.

In a single financial year, you can put up to $30,000 of your pre-tax earnings into super (or $35,000 a year once you turn 49). This $30,000 cap includes compulsory contributions from your employer plus any extra amount that you salary sacrifice. And now is a great time to make the most of your cap ― as of 1 July 2017, it will likely be reduced to $25,000 a year.

The beginning of the financial year is the perfect time to get started. Work out how much you can afford to salary sacrifice each week or month, then ask your boss to contribute this amount to your super from each pay cheque.

If you’re already salary sacrificing, be sure to keep track of how much you’re putting into super overall. For example, if your salary has increased during the year, then your employer’s contributions will have gone up too. That means you might need to reduce the amount you’re salary sacrificing, so the total amount doesn’t exceed the relevant cap.

Resolution 2: I will invest any extra cash

In the last 12 months, did you receive any extra money on top of your regular salary ― maybe a bonus, an inheritance or a gift? When extra cash comes your way, it’s easy to let it flow straight back out again, so it’s worth planning ahead in case you get a windfall next financial year.

A great way to make this extra cash work for you is to invest it straight into your super as an after-tax or ‘non-concessional’ contribution. Remember, a boost to your super now will make a big difference when the time comes for you to retire.

But be careful how much you put in ― an annual non-concessional contribution cap of $180,000 exists to limit the amount of after-tax contributions that can be made. One of this year’s Federal Budget announcements was the introduction of a $500,000 lifetime cap on non-concessional contributions to replace the current annual cap of $180,000. So if you’ve already made more than $500,000 worth of after-tax contributions from 1 July 2007 to now, you won’t be able to put in any more.

Resolution 3: I will keep track of my tax deductions

It’s tempting to leave it to the last minute to sort out your tax deductions ― but as you may know, this can result in a big headache when tax time rolls around. So to relieve some of the stress, it’s worth keeping track of your deductions right from the get-go.

Make sure you understand what you can claim for. Depending on your situation, this could include business or home office costs, repairs on your investment property, professional development expenses, financial advice fees or income protection insurance premiums.

Even before the financial year starts, it’s worth considering how to make your deductions work best for you. This may mean paying some of next year’s expenses before 30 June — or if you’re expecting a tax increase in the next financial year, holding off some payments until then.

Keep in mind that for some expenses, like income protection premiums or investment fees, you can prepay up to 12 months’ and claim a deduction in the financial year you make the payments. So it’s a great idea to work out a payment plan now for the year ahead.

Contact us today

As we all know, making resolutions is just the first step ― sticking to them is the real challenge. For expert guidance and advice, with solutions tailored for your unique needs and goals, contact me today.

  • Call 02 6642 0433.
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Copyright © 2016


This communication has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at 3 June 2015. While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), to the maximum extent permitted by law, no person including Colonial First State or any member of the Commonwealth Bank group of companies, accepts responsibility for any loss suffered by any person arising from reliance on this information.

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Liz Maroney and Westlawn Wealth Management Pty Ltd ABN 32 124 861 409, Authorised Representatives of GWM Adviser Services Limited ABN 96 002 071 749, Australian Financial Services Licensee, 105 -153 Miller Street North Sydney NSW 2060.