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Tash
Product Disclosure Statements – what are they?
Do you know what a product disclosure statement (PDS) is?
Many people now use them, and various companies refer to them in their advertising, but from personal conversations about things I write, I know many people don’t know what the term means.
A PDS is simply a document listing the key features of financial products are described; it is the little booklet you got about your savings account, insurance policy, super account and so on. Basic topics covered by a PDS include fees, options, inclusions and joining/buying the product.
There are variations between industrires and companies but generally the company has to make a PDS available before you buy their product – they can’t make you read it obviously but they must have allowed you that opporutnity.
A PDS is a point of reference when deciding between products and when you need to know something later (eg does my house insurance cover rising water or just floods?) Many PDSs are long and may not be visually appealing, but they are worth holding onto.
2010-11 is almost here!
Do you think it is time to prepare for a new financial year – or are you going to wait until July to work on your tax and accounting obligations?
I always plan to be organised so I can submit a tax return in early July, but it is never quite that smooth in reality. My bookkeeper needs time to enter all the data from June, I need my super fund to send me a deduction letter and so on.
However, I really do look at my accounts now so I can maximise this financial year – thinking of deductions in July won’t help much!
Here are some of my tips on keeping accounting issues under control in June/July:
- have regular data entry for expenses throughout the year- or get a bookkeeper!
- keep a document going all year to note down anything that may go into your annual report (i.e. note down any significant changes or events so you don’t have to remember them when you starting writing the report) This will also help a lot if you outsource the report writing
- if website pages/attachments need to be updated for 1 July (e.g. for legislation or price changes), prepare them in advance – even if data is unavailable until late June, you can have everything else ready to go
- book your accountant/tax agent early so you can choose a date that suits you
- get someone to help you if you are stuck entering a lot of data (e.g. for new depreciable items or household accounts if you are home-based) – it’s much quicker if one person reads out the data while the other types it
- check your online bank access – many will show the year’s interest instead of adding up each month’s or waiting for a printed statement
- review your payroll records now so you have all the information when sending out PAYG statements
- automate any regular payments – this can be useful all year, but taking the time in April/May to schedule payment of memberships and subscriptions due in June can save time and the stress of forgetting
- prepare communications in advance (blog posts, newsletter information) so those tasks are out of the way for a month or so
- have a good account filing system as well as your actual accounts – I use a display folder with a plastic envelope per month plus some extras (‘to be entered’, ‘pending’, etc) – and avoid changing it at this time of year
How else do you make your accounting and tax tasks quicker or easier?
End of financial year
It’s getting very close to 30 June, but there’s still time to prepare your finances for it. Some things I have been thinking about (and doing in some instances) are
- to get a tax deduction as a self -employed person, you need to make a personal contribution and submit a Deduction for personal super contributions form to your Fund
- the super co-contribution only applies if you make a personal contribution by 30 June (and meet certain criteria like income levels)
- the small business 50% tax break has been legislated, but it doesn’t run out til Dec 2009 so purchases don’t have to be made this week
- individual tax rates are reducing from 1 July so increasing your deductions this year may decrease your tax more than making the same deductions next year
- sending out invoices now rather than after 1 July may affect your income levels (depending on how your accounts are set up) and may help your customers with their tax preparation and budgeting
- organising your invoices and receipts now could mean getting your tax return done sooner, which is great if you’re getting a refund!
How much do you do to prepare for the end/start of financial years? Is this when you do budgets and analysis or do you base that on the calendar year instead?
Preparing for 30 June…
It is now June and the end of financial year is rapidly approaching – are you ready for it?
Here are some of the things I am considering at the moment to maximise my position at 30 June. Is there anything else you do at this time of year?
- send out all pending invoices and statements as soon as possible – not only does it increase your cash flow this month, many other businesses will appreciate being able to pay (and claim a tax deduction) this financial year
- pay off all outstanding invoices if possible – you may as well claim deductions now rather than in 13 months time! And the new tax rates may mean deductions this year will help your tax position anyway
- consider making a contribution to your super fund – this is tax deductible for the self-employed now
- if you or your business supports a charity and you haven’t made a donation yet, now is a good time to do so as it can then count as a tax deduction this financial year – I wonder how much their donations go up in June each year!
- if you are eligible for a Government Co-contribution, your personal contributions of up to $1,000 must be made to your super fund by 30 June – and changes from the budget or an increased income next year may mean you aren’t eligible next year so get in while you can!
- consider making business purchases that will be needed soon. Not only can you claim it as a tax deduction, it may save you stress when you do actually need the item – printers notoriously run out of ink the day your proposal is due!
- get your accounts sorted and in order – the more organised they are, the quicker you (or your accountant/tax agent) can get the return completed and submitted
- collate related information, such as a travel log or noting the distances travelled, home office bills, private health insurance policy details, bank statements and PAYG statements
- if you run a service business, check the proportion of income from each client as tax rules can change if more than 80% of your income is from one source. There’s not a lot of time to adjust that, but if you’re on 81 or 82% a few quick projects may make a difference
- consider taking out health insurance if you are a higher income earner ($50,000 for a single or $100,00 for a couple/family) – the higher income brackets come into effect from 1 July 2008
- check if there are any expenses you can (and will benefit from) pay now rather than later in the year – for example, insurance premiums and interest on investment loans can be paid in advance to be claimed as a tax deduction now, and are sometimes cheaper paid as a lump sum. Obviously, this affects cash flow and other factors so is not always the best plan, but it never hurts to research your options!
By preparing now, you may decrease your tax liability and be ready to start the new financial year with a clean slate.
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