Tips on Managing Your Money During EOFY
Whether you’re an employee, contractor, freelancer, or small business owner, the end of the financial year (EOFY) can be a stressful time for managing money. Retailers often ramp up marketing campaigns, tempting taxpayers to spend unnecessarily. While EOFY sales may seem appealing, not every purchase translates into a tax benefit.
The key principle is simple: only spend on items you genuinely need for work or business purposes. Impulse purchases, no matter how discounted, are not tax deductible.
Don’t Be Misled by Marketing Hype
Many EOFY campaigns suggest that spending a certain amount will result in a direct dollar-for-dollar tax return. This is misleading.
If you spend $100 on a legitimately deductible item, the ATO does not refund the full amount. Instead, the expense reduces your taxable income, which may lower your tax liability. For employees, purchasing tools or equipment needed for work before June 30 can increase your tax refund, but it will never be a full reimbursement of the purchase cost.
Key deduction rules:
Items costing $300 or less for employees can be claimed immediately
Items over $300 must be depreciated over their effective life (e.g., a computer may last up to four years)
Small business owners may claim a full deduction for assets under $20,000, provided they are used in the business and installed before year-end
Do the Maths Before You Buy
EOFY can be a good time to make strategic purchases, but it’s important to ensure any spending genuinely benefits your finances. Discounts on laptops, software, or equipment may look attractive, but they may not improve your bottom line or provide a significant tax advantage. Always consider:
Is the item necessary for your work or business?
Will the expense genuinely reduce your taxable income?
Could this purchase be deferred without affecting operations?
Avoid Crooked or Misleading Claims
The ATO has access to extensive data and is vigilant in identifying suspicious or exaggerated claims. Claiming personal items as work-related, or inflating deductions, can trigger audits, penalties, and interest charges.
When claiming expenses, be honest about the proportion of use for work. For items like vehicles or computers used partly for personal purposes, work with your accountant to calculate the correct deductible percentage.
Is the item necessary for your work or business?
Will the expense genuinely reduce your taxable income?
Could this purchase be deferred without affecting operations?
Be Cautious with Prepayment Plans
Some small business clients may request payment for work not yet performed before June 30. While this may provide a temporary cash boost, it can inflate your profit and taxable income. Always check with your bookkeeper or accountant before agreeing to prepayments to ensure it aligns with your financial goals.
Keep the Bottom Line in Mind
Tax deductions exist to ensure that individuals and businesses are not taxed on legitimate expenses that support income generation. Purchases should be necessary and justifiable, not influenced solely by marketing hype or last-minute sales pressure.
By keeping a clear focus on essential expenses and avoiding unnecessary purchases, you can protect your finances and make the most of your deductions.
Seek Expert Advice
There is no one-size-fits-all approach to EOFY planning. What works for one business or individual may not suit another. Proactive planning, with guidance from a qualified tax professional, can help you:
Maximise legitimate deductions
Ensure your return is accurate and compliant
Avoid common EOFY pitfalls
Whether you prefer online support or in-person consultation, our team of tax experts across 400+ offices in Australia is ready to provide personalised advice and help you get the maximum refund possible.
By keeping a clear focus on essential expenses and avoiding unnecessary purchases, you can protect your finances and make the most of your deductions.
By staying focused on necessary expenses, planning strategically, and seeking professional guidance when needed, you can navigate EOFY with confidence. Smart money management not only helps you make the most of your tax deductions but also ensures your business or personal finances remain strong and compliant. Take the time now to organise, review, and make informed decisions—your future self (and your wallet) will thank you.
Maximise legitimate deductions
Ensure your return is accurate and compliant
Avoid common EOFY pitfalls
Whether you prefer online support or in-person consultation, our team of tax experts across 400+ offices in Australia is ready to provide personalised advice and help you get the maximum refund possible.
By keeping a clear focus on essential expenses and avoiding unnecessary purchases, you can protect your finances and make the most of your deductions.
