The end of the financial year usually sees us mentally planning how we’re going to spend our tax returns. With interest rates on the rise and everything more expensive, now is the time to be smart with your tax return. Here are five ways to do exactly that.
Set up a home office
If you’re working from home and have been confined to the dining room table, it’s time to create yourself a professional working space. It looks like remote working isn’t going anywhere fast, so why not get the office furnishing and new laptop you’ve been dreaming of? Keep records because you’ll be able to claim depreciation of office furnishings for the 2021-22 period.
Put it towards your mortgage
During the first five years or so of paying off your mortgage, you mostly end up paying just the interest. By making extra payments you can reduce the amount of interest you pay and the duration of your loan. Hot tip: if you make additional loan payments, it will soften the blow should interest rates experience a hike.
Consult a financial expert and get some advice on well-performing shares on the ASX. With any share market trading, there is a degree of risk, but there’s no reward in life without some risk. If you’re a beginner, you may want to start out by investing in companies that are performing well and pay a regular dividend. Micro-investing apps, such as Raiz, are also a good place to start for newbies. Raiz allows you to set up recurring payments as little as $5 to invest into ready-made diversified portfolios of stocks. This type of investing is recommended to those interested in investing long-term. For those who are more experienced and have a great amount they’d like to invest, a financial advisor can help you diversify your portfolio.
Invest in yourself
If you’re living in a state that’s in lockdown, put your time at home to good use by upskilling with continued professional development. Furthering your education can be costly, but if you study in your chosen career field and it results in an official qualification, the money you spend can be claimed for on your next tax return.
Top up your super
Aside from tax benefits, if you add voluntary payments to your superfund, you’re setting yourself up for a comfortable retirement. Retirement age might seem like light years away, but you’ll be surprised at how fast it creeps up. Be sure you don’t exceed the concessional caps to avoid being taxed. An extra $20 a week in voluntary contributions could see your super balance increase by approximately $31,000 before you reach your late 60s.