Tag Archives | Tax

Spring Clean Your Finances

springflowerSpring Clean Your Finances

Spring flowers, spring winds, time to prepare for summer. That means tidying up the garden, clearing out the garage, the kitchen cupboards and the wardrobes. It’s also a good time to put your personal finances under scrutiny.

Now that the end of the last tax year is long past, clear out your paperwork. For tax purposes, financial records must be kept for seven years, not forever! Store your records in annual files so you can easily get rid of your oldest file and start a new one for the coming tax year.

Storage of important documents needs careful consideration. Keeping a scanned copy of your documents on a portable disk drive, flash drive, or in the ‘cloud’ enables them to be accessed from wherever you are in the event of a disaster. Access to certain scanned files can be given to another family member in the event that something happens to you. While you are at it, make sure you have an up-to-date Will.

When you are sorting out your bank and credit card statements, take the last few months of statements and go through them with three coloured highlighters. Use one colour for essential spending of fixed amounts such as rates, insurance, rent and mortgage payments. Use another for essential items where the amount is not fixed, such as food and petrol. The third colour is for anything that is not essential, such as dining out and coffees. This will give you a good idea of where you money is going.

Spring clean your debts by adding up how much you owe and the rate of interest you are paying, then set up a plan to get rid of as much debt as you can before the end of the year. It’s less than four months till Christmas!

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Top Up or Miss Out

The end of June is an important date for KiwiSaver members. The financial year for KiwiSaver runs from 1 July 2009 to 30 June 2010 and if you have contributed at least $1,040 to KiwiSaver during that time, you will be eligible for the full amount of Government tax credit to be paid into your KiwiSaver account in July. The maximum value of the tax credit is the lesser of $1,040 or the total of your contributions for the year. If you have put in $900 through deductions from your pay, then your tax credit will only be $900. By putting an extra $140 into your account before the end of June you will get the full tax credit of $1,040.
If you are contributing 2% of your pay into KiwiSaver and you earn less than $52,000 a year, or if you are contributing 4% of your pay and you are earning less than $26,000 a year, you will need to top up your KiwiSaver account to get the full tax credit. To find out how much you need to top up your account by, check your contributions with either your product provider or your financial adviser.

If you are self employed or not working and under the age of 65, you can still become a KiwiSaver member by joining directly with the provider of your choice. By contributing $1,040 a year as a either a single payment or $84 a month you will get the full benefit of the tax credit. It is not too late to join now. New members will receive the Government kickstart payment of $1,000 and a tax credit for the first year based on the number of days of membership.

Get your payments in as soon as possible to allow time for processing!

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