Happy New (Financial) Year!

Michelle Bromley CFP®, Director – Strategy and Advice

The turn of a new financial year is an opportune time to set yourself up for the coming 12 months, get organised and streamlined, and strive to maximise benefits!

  • Claim your $250 Power Saving Bonus
  • Be efficient with your tax return
  • Update your budget
  • Shop around for better deals on bills
  • Update Centrelink with lower financial asset values
  • Make best use of your savings

Claim your $250 Power Saving Bonus

The $250 Power Saving Bonus is a one-off $250 payment for Victorian households to help ease cost-of-living pressures and encourage them to compare energy offers and save money.

The Bonus is available to all Victorians households who visit and lodge an application via the Victorian Energy Compare website between 1 July 2022 and 30 June 2023.

The $250 Bonus is limited to one payment per eligible household.

I can attest that the Government is handing out free money just for spending a bit of time comparing gas and electricity providers – I lodged my application on 15th July, and it was paid into my bank account three days later!

Be efficient with your Tax Return

Let’s face it, doing your tax return is about as pleasant as visiting the dentist. You’ve got to do it once per year, but there’s more joyful ways to spend your weekend.

Except this year I did my tax return in less than an hour.

At the start of last financial year, I downloaded the ATO app to my mobile phone and used the My Deductions tool in real time throughout the year, logging claimable expenses and taking photos of receipts as I went.

Then, Sunday morning on the 17th, coffee and vegemite toast in hand, I uploaded my deductions from the app to the ATO, logged into my.gov.au and accessed the Income Tax tab of my ATO record. I had to enter some bank interest that the ATO hadn’t caught up on yet and check through the entries in each section to make sure it was all there, but an hour later as the family were raising from their slumber, I hit the lodgement button.

My tax refund was paid 5 days later – thank you Commissioner of Taxation!

Update your Budget

Having a budget gives you a greater awareness of where your money is going, helping you to meet bills and the cost of living, highlight unnecessary expenditures and opportunities to save.

To get a realistic picture of your cost of living, look for budgeting tools which may be provided by your financial institution. Some institutions provide a dashboard allowing you to categorise and track different types of expenditure, set a budget limit, and may even link to other institutions to give you a broader overall picture of your wealth.

If you prefer to keep track yourself, the moneysmart budget planner is available online or in a downloadable excel spreadsheet. MoneySmart is a fantastic resource for explaining the budgeting process as well.

As much as I love a spreadsheet, the easy way is to work your budget out at the start of the financial year using what you spent last year and adding a 2% margin for inflation (and interest rate rises). Break up spending into a few main categories like bills (utilities, insurance, rego, council rates etc), liabilities (mortgage, personal loans), and living costs (groceries, health, personal care etc).

Then divide each figure by how many pay days you have per year and put those amounts into a separate bank account set up for each category. Once you’ve built up a buffer, you can start paying your bills monthly – I send the utilities a monthly amount and have direct debits set up as well to minimise the head space taken up by such mundane tasks.

I’ve been doing it this way since last century and I’ve never had a worry about ‘more month than money’.

Shop around for better deals on bills

It’s an oldie but a goodie – don’t stick with your existing provider out of apathy. Cost of living is rising so make some savings where you can by shopping around for a better deal.

I’ve already mentioned the Victorian Energy Compare website which can get you a better deal on your electricity and gas.

Did you know that the Government also has a comparison website for health insurance to help you find a value for money policy that matches your needs?

Canstar is the biggest Australian comparison website that can show you a broad range of products and providers for utility, phone, internet, lending, and insurance. They can lead you to the provider’s own website where you can do a bit more research on the product to make sure it fits the bill.

Update Centrelink with lower asset values

Centrelink still largely relies on payment recipients self-reporting their assets and income as the basis for payment calculations. Centrelink don’t automatically get an update of your share portfolio, bank balance or SMSF member balances – you must keep Centrelink updated and do so within 14 days of any significant change.

Some reporting is supplied directly to Centrelink – certain employers report via the payroll system, and retail superannuation pension providers are required to report the capital value and payment information of account-based pension recipients twice per year in March and September.

However, if you’re ‘assets tested’ as most people are, you can update Centrelink yourself out-of-cycle which can be beneficial when markets fall and asset values are lower than when last revised, which was in March. Just be aware though that you can’t update Centrelink on the value of just one asset – you must update the value of all assets, so be careful that a reduction in price of one asset is not wiped out by an increase in another.

Centrelink have indexed some of their thresholds as of 1 July 2022, increasing the assets free and disqualifying assets thresholds as well as the income free and disqualifying income limits.

So, if you are age 66.5 or older and have assessable assets (generally excluding your home, accommodation bond/RAD, and pre-paid funeral/burial plots) of less than $915,500 (couple, homeowner) or $609,250 (single, homeowner) you could now be eligible for some Age Pension.

Log in to my.gov.au and link your Centrelink record to apply or update your information.

Make best use of your savings

Now that you’ve done all the hard work to find savings opportunities, got your free $250 bonus and a timely tax refund, it’s time to figure out some goals to work towards.

If you’ve got 3-6 months of living needs in bank account you won’t touch unless it’s a true emergency, you can think about using your savings towards:

  • Reducing your debt
  • Adding value to your home
  • Adding to your super
  • Saving for a goal (like a well-deserved holiday!)

If you’re interested in adding to your super and you are eligible to make concessional contributions, have a go with the MoneySmart Super Contributions Optimiser for a side-by-side comparison of receiving the standard 10.5% employer Superannuation Guarantee contributions and making additional pre-tax contributions via salary sacrifice (or contributing after-tax and then claiming a tax deduction).

For a person earning the average wage of $90,000pa who has $500 per month after-tax surplus cashflow, they could salary sacrifice $9,160 pa ($763.33 pm) towards additional concessional contributions, to claw back a net tax benefit of $1,786 from the ATO’s grasp and increase their net super by $7,786.

Just remember you probably can’t get access to those funds until you’re 60, so younger folk should look to savings & investment outside super first.

Happy New (Financial) Year!

As I write this, the team at Prime Melbourne are about to head off to our end of financial year party, the first one for two years thanks to the extended COVID lockdowns we had to endure during 2020 and 2021. Wishing you all a Happy New (Financial) Year from the team at Prime Wealth!

The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (www.primefinancial.com.au/fsg) for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.

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