Home / Investing 101 / What financial advisers are recommending before 30 June

With less than a month remaining, EOFY is fast approaching and for financial advisers, it's the most stressful time of the year. In under a month, things can turn from calm to overwhelming, at the blink of an eye.

With less than a month remaining, EOFY is fast approaching and for financial advisers, it’s the most stressful time of the year. In under a month, things can turn from calm to overwhelming, at the blink of an eye.

So, now is a good time to prepare for the end of this tax year. It’s also a good time for advisers to reach out to clients with strategies that could be beneficial to their financial well-being given the adverse economic effects of the COVID-19 pandemic. For that reason, we’ve put together an “EOFY checklist” with areas of priority from advisers we speak to regularly:

• Selling loss-making investments – With last month’s tech sector rout, clients may be holding assets that have suffered huge losses. It could be worth selling these loss-making investments but this must be done before June 30. That way, they can be used to offset any substantial capital gains.
• Holding-off on large capital gains – On the other hand, a large capital gain could be held-off until July 1 – but only if it doesn’t detract from the investor’s investment strategy or decision-making process.
• SMSF audits – Advisers need to ensure SMSFs are compliant with superannuation laws: SMSF auditing and lodgements for FY21 must be completed by 5 June.
• Superannuation pension phase – For those that are in pension phase, advisers need to ensure that they have met all their requirements. For those thinking about taking the pension, they might want to start in June, because they receive tax benefits pro-rata-ed without having to draw down from the pension.
• Superannuation Accumulation phase – Clients may want to think about their contribution caps. They can top-up their concession contributions which will build a tax deduction. Non-concessional contributions will give their superannuation a boost. Large lump sums from the sale of a house can apply.
• Deductions from investment strategies – Clients who use gearing strategies can deduct next year’s interest costs this financial year. It can be offset against a large capital gain.
• Borrowing strategy – For some clients employing a borrowing strategy to start life with a large capital base and dividend income.
• Tax deductions due to Covid – In contrast to last year, advisers have a clearer understanding of Covid’s financial impact and how it affected a business or taxable government benefits, like JobKeeper.
• Fixed rate loans – Those in the position to do so could pre-pay interest for the next 12 months, before June 30, so that a deduction can be made this financial year. The same goes for pre-paid investment property expenses.

EOFY is a great time to be in contact with your adviser and find out if they have digital tools that can help clients the skills they need to operate more efficiently. It’s also a perfect time to re-evaluate investment portfolios, from both a tax and risk perspective. But most of all, it’s a time for investors to get their house in order, compliance sorted, investments prepared and strategy document updated.