Do you ever use your car for work? Accountant, Matt Besley, from Quill Group South Brisbane talks about the changes in claiming work-related motor vehicle expenses and how you can maximise your return.

Click here to read more about “How to claim work-related motor vehicle expenses”.

Boost your Savings!

Ever thought that there has got to be a simple way to boost your savings. What can you do now, that will impact your finances in the future?

Michelle Gargar takes us through the 3 key ways to boost your savings from our Money Matters segments. Are you doing any of these yet? It is not too late to start.

Since it’s already April, I thought it might be the perfect time to talk about and review our New Year’s resolutions. If you set them, how are you doing? Still sticking with it or has your enthusiasm waned? I ask because I think we may be overlooking something that makes resolutions very difficult to keep.

Set Goals

While I don’t start off the year vowing against certain behaviors, I do set goals for myself. Goals and resolutions are indeed the same thing but just phrased differently. A goal carries a positive connotation and has embedded within itself, a sense of purpose and the seed of promise. That’s how I prefer to think about shaping my future.

This mindset touches on something that I think trips up many investors. Like New Year’s resolutions, we frame our past financial behavior as doing something wrong or vowing never to do that again, eg. did you resolve to never sell low again after the 2008 GFC. Who likes admitting that they made a mistake?

Instead, when we talk in terms of setting goals, something happens. It becomes more about the possibility of something good happening as opposed to the negative of a past mistake.

Attitude does matter

When we talk about behaving and making better financial decisions, attitude matters. By setting goals that imply something good, we are changing the tone from one of blame to one of possibility. For example, instead of resolving to never sell low again you could set a goal to build a low-cost, diversified Investment Plan? The goal deals with the mistake and gives you a sense of purpose and the seed of promise while the resolution implies you did something stupid.

If you’re struggling with your resolutions, it’s not too late to make the switch. Set a goal or two for 2016 and see what happens.

When it comes to doing business with your friends what should you be charging? Should you be giving a discount. Michelle talks about how you can approach this topic.

Michelle talks about going into business with your family and some guidelines you should follow. Find out what you need to know to make sure you are covered at the end of the day.

Money Matters on Juice 107.3 – Private health insurance increase

As the government subsidy for health insurance falls, private health insurance fund members are bracing for premium hikes four times the inflation rate. Michelle talks about what you need to do to make sure you are on top of it all. Get ready for the private health insurance increase coming 1 April 2016.

Saving: a swear word for some, near impossible for most, but a necessity for those who understand the importance of their future.

When you were a kid, getting pocket money probably gave you great delight in dreaming of all the ways you could spend the money. After all, you were in charge now of that precious gift, not your parents. For most of us as young children, it probably meant a trip to the corner store and it was spent on a bag of mixed lollies.

So there is a silver lining with the demise of the corner store: our kids of today don’t get to waste their money there. Yes, they have other things to spend it on, but maybe with the introduction of many parents paying the pocket money into a bank account we are creating more savers than spenders. Or are we?

Suncorp Bank Australians’ Saving Habits Report in 2015 indicated Generation Y consumers as Australia’s best savers. The report indicated they prefer to save for a holiday rather than the bricks and mortar, saving on average about $533 per month. The age group of 25 to 34 have certainly impressed because it was once the baby boomers who once held the title, coming from a more thrifty time of living. The fact that the age bracket we are praising tends to stay at home longer could have something to do with it.

So what are some tips on how to save our money the most effectively?

7 tips on how to save money

1. Set up a bank account that is not with your bank

Obviously, the more money you can lock away without the ability to touch it, the easier it is to accumulate. So the best option, assuming you don’t have any current property debt, is to set up a bank account which is not with your current bank, such as an online bank, where money can be automatically transferred to it on a regular basis. If you feel you are not disciplined to set this up yourself, you could ask your employer to have a portion automatically deposited into the account direct from your pay packet.

2. Save money with your mortgage

If you are a mortgage holder, one of the most effective places to have this regular saving paid to is into your mortgage. This means in addition to your monthly/weekly payments. This way you are maximising the interest rate you are effectively earning on the saved amount, as you are reducing the effective interest expense you are paying off. It doesn’t earn you any more money as such but saves you money in the long run.

3. Name and claim your bank account

If the general word “saving” makes you ill, then rename the account to the item you are saving for. For example, get the bank to call it your Holiday Account, which indicates what you are saving for, rather than just a savings account. Name it and claim it!

4. Be ahead of the game – save for a rainy day

You should always be thinking about the “rainy day” ahead and storing up what you think is a working capital requirement to keep your household functional if the “just in case” moment strikes. Should you lose your job, or work is needing to cut back, then you need to know that the next month’s expenses could possibly be covered.

5. Don’t short change the small change

Nothing is too small to save. If you don’t use your loose change left over in your wallet, but rather gather this over a period of time in a tin or “piggy bank”, then you may be surprised how much this can add up over time. The secret is first in the accumulation, then have it counted and most importantly, deposited. But always have a purpose for why you are collecting it this way.

6. Try to be a Super Saver

The ultimate saving place is into your superannuation fund. Sure you can’t touch it until you’ve reached 60 but accumulation this way could change your future dramatically. If you don’t know about how you should speak with your accountant or financial advisor. The best thing about saving into super is you can do this out of your pre-tax earnings and your post-tax earnings, depending on what’s best for you.

7. Use resources like Apps

And if you can’t do it on your own, there are Apps now that can help you with not only saving but budgeting and getting out of debt. When choosing the best one to use, always check the reviews and the features they are offering to make sure this is what you need.

Saving for savings sake is not what this is about. You must have a goal or a reason behind what you are saving for and then feel comfortable to spend that money when the time is right.

And then you should also look beyond saving in just a normal bank account. As you accumulate funds it is wise to branch out and explore other ways to invest your saved dollars. This is where a good financial planner comes to the forefront and becomes an integral part of achieving your plan.

If you really don’t know how to start saving, then take some time out on your next weekend and discover what you could save for. Setting a goal is the first step in shaping your future.

How you used to claim

Traditionally there has been four methods of ATO approved motor vehicle expense claims up to 30 June 2015:

1. Cents per km;
2. Logbook method;
3. 12% of the original value; and
4. One-third of actual expenses incurred.

The new way to claim

That has all changed now with the new legislation passed on 30 November 2015.  This has reduced the options down to either one of the following:

1. logbook method; or
2. flat rate of 66 cents per kilometre method. Historically, when claiming motor vehicle expenses using the cents per kilometre method, the rates had varied according to engine size, and the maximum number of kilometres you could claim was set at 5,000kms.

From 1 July 2015, the flat rate of 66c/km will apply regardless of the engine size of your vehicle. The maximum number of kilometres you can claim remains at 5,000km. To make expense claims using this method, written evidence is not required, however, you will need to be able to show how you worked out your business kilometres.

If you have a larger car that is used primarily for business purposes, the logbook method is recommended.

When claiming under the logbook method, you will need to determine the business use percentage of the vehicle based on a logbook prepared over a 12-week continuous period; you can purchase these from stationery retailers or download one of the many apps available on both Android and iPhone.

The logbook method

Logbooks are valid for a period of five years unless your business use changes dramatically. Your logbook needs to contain the following information:

• When the logbook period begins and ends;
• The car’s odometer readings at the start and end of the logbook period;
• Total number of kilometres the car travelled during the logbook period;
• Number of kilometres travelled for each journey recorded in the logbook (if you made two or more journeys in a row on the same day, you can record them as a single journey). You will need to record the:
  • Start and finishing times of the journey;
  • Odometer readings at the start and end of the journey;
  • Kilometres travelled; and
  • Reason for the journey.
• Business-use percentage for the logbook period; and
• Odometer readings at the start and end of each income year you use the logbook method.

The 12 week period can cross over two financial years, provided the period is representative of your travel throughout the year. This means if you start your logbook late in May or early June, you can continue to record information into July through to September to cover the 12 weeks required.

The business percentage calculated for the 12 week period is applied against the running costs of the vehicle, the decline in value and any interest charges as a result of vehicle financing; i.e. fuel, oil, repairs & services, insurance and registration.

While it may appear to be a lot of information to retain for record-keeping purposes, the tax benefits are certainly worth it for vehicles used predominantly for business purposes.

If you require any assistance with determining which method you should be using or how this legislation impacts your tax position, please contact our office.

Michelle shares a few ways you can get some extra dollars in your pocket. What assets can you utilise? Car parks? Bedrooms? Even your car. Just by becoming more resourceful, you could potentially increase your wealth.