When you deploy, your income is likely to increase significantly with additional deployment allowances, and depending on where you deploy, it may be tax free. This boost to your budget can be a great opportunity for you to get ahead financially. In fact, many ADF members have been able to put themselves and their family years ahead of where they would have been without the deployment.

However, immediately before, during, or immediately after a deployment is probably not the best time to be making important financial decisions, you’ll have many other things on your mind. There’s no rush to spend what you worked hard for.

Wait until you know exactly what you have and then take the time to properly consider how best to make use of your money. Never commit your money before you’ve actually received it because force assignments can change, deployments can be cut short.

Most people have a range of bills, credit card and loan payments that need to be paid on a regular basis. Paying bills and loan repayments on time is critical if you want to avoid late fees and interest charges. Late payments can also affect your credit rating.

We have seen too many ADF members inadvertently damage their credit rating or incur large penalties because they forgot one or more bills or loan repayments. Here’s some tips on how to avoid this:

Banking

Make a list of all your bank accounts, including savings accounts and term deposits. Share the list with someone you trust, like a spouse, family member or close friend, or let them know where the list is so it can be located if necessary.

Decide whether you want your spouse or partner to have access to your bank accounts, or whether it would be easier to say, have a joint account for bill payments.

Family budgets

When you deploy, your income and expenses may change. You may receive additional allowances and some expenses like food and transport may decrease. It’s important to think about the likely impact to the family budget and discuss it with your partner before you go.

If your income does increase and you have no high-interest debt, why not put the extra cash into a savings account, so it can go towards achieving a financial goal when you return. It will also make it easier adjusting back to a reduced income when you get home.

Bills and debts

When you list all your bills and repayment obligations, don’t forget the ones you pay less frequently, like utility bills, car registration and insurance.

Setting up direct debits or credits to pay each account on or before the due date will ensure you don’t miss a payment. It’s a good idea to maintain a minimum balance in your bills account and just keep an eye on your balance if you know a large expense is due for payment. You don’t want to come home to late fees, interest and debt collectors.

Similarly, make sure any loan repayments have been automated so you continue to meet your repayment obligations while you are away.

If you receive your bills via email, consider whether you want to give someone you trust access to your email while you’re away, just in case you’re unable to access them yourself.

Credit cards

If you pay for things on a credit card, don’t forget to make sure the credit card gets paid. Setting up a direct debit to pay the balance in full each month, on the due date, will save you from interest and late payment fees.

Suspend services you don’t need

When you look at you list of regular bills, consider whether there are some services, such as internet, streaming services or memberships, that you could suspend while you are away. This could save you a bit of money by not paying for things you won’t be using.

If you do get services suspended, get the agreement in writing, and keep an eye on your inbox just in case the bills keep turning up.

Foreign currency

If you plan on spending money overseas, find out what currencies are accepted in the countries you will be spending time in and decide whether you want to take an amount of foreign currency with you.

Will

A will is a legal document that states how you would like your assets distributed when you die. If you die without a valid will you will be said to have died intestate and your assets will be distributed according to intestacy laws in your state, which may not be in line with your wishes.

We think it’s vital that all serving ADF members have a valid, up to date will. A properly drafted will should ensure, that in the event of your death, your assets and belongings go to the people or causes you care about, with minimal costs or delay.

In reality, a will is not about you, it’s about the people you leave behind. A will is also important because it may be used by the Commonwealth Superannuation Corporation (CSC) to decide how your considerable superannuation death benefits are distributed if you do not have an eligible spouse.

For a will to be valid it must meet certain criteria, which is why we recommend seeing a lawyer. An ADF LEGALO can usually prepare a simple will for free. Never use a will kit, a qualified legal professional can make sure it’s written and executed correctly.

Store a copy of your will in a safe place (DMFS stores wills of permanent members and some reservists) and tell your executor and next of kin where it is.

Review your will whenever your personal circumstances change, for example, you get married, separated or divorced, or become a parent. Make arrangements to update your will if necessary.

Power of attorney

While a will is something that all adults should have, a Power of Attorney (POA) is something that you might want to think twice about.

When you grant someone a POA, you are giving them the power to manage your money on your behalf. That means they can operate your bank accounts, buy or dispose of assets, and make financial decisions as if they were you.

You can limit a POA, for example, you could write it so that it comes into force on the day you deploy, and ceases the day you get back. You could also limit the dollar value of transactions so, for example, your partner could manage the day-to-day finances but not sell the house out from underneath you.

There are different types of POA, for example:

• General – ceases if you lose mental capacity.
• Enduring – continues to operate after you have lost mental capacity.
• Medical – allows your appointee to make decisions about your medical treatment if you become mentally or physically incapable of deciding for yourself.

Unfortunately some ADF members have granted a POA to someone who turned out to be untrustworthy and they returned home to find their money and their assets gone. Don’t let this happen to you, Only grant a POA to someone you completely trust and get appropriate legal advice first.

Legal advice

Your first point of call for legal issues should be your on-base Reserve legal officer. They can usually help you prepare a will free of charge or tell you how to find an appropriately qualified legal professional.

In Australia, we have some of the most comprehensive and enforceable consumer protection and product safety laws in the world. You have rights under the national Australian Consumer Law and if you have a problem with a product or service, there are a range of options for seeking assistance. They include, the Australian Competition and Consumer Commission (ACCC), the office of fair trading in your state, as well as industry ombudsman services.

This is not necessarily the case when buy goods or services overseas. Here the Latin phrase ‘caveat emptor’ or ‘let the buyer beware’ holds sway.

For example, if you buy expensive jewellery overseas for a loved one which turns out to be fake, there may be no practical recourse. You’ll have to wear the loss, literally. Likewise when you buy goods online from an overseas trader while you are located in a country other than Australia, there may be nothing you can do if the goods don’t show up.

Be extra careful, do your homework and shop with reputable traders. Don’t spend more than you’d be prepared to lose if the goods turn out to be fake, broken or defective.

Using your credit card overseas

There are a couple of additional points to note if you plan on using your credit card to shop overseas:

• Notify your card issuer where you are travelling before you leave home to avoid having your card stopped.
• You will usually be charged for currency conversion fee when you pay for something in a foreign currency.
• Find out if your credit card offers any protection or extended warranty on goods purchased with the card, and whether it covers you for goods purchased overseas.
• Credit card fraud is rife and identity theft is increasing across the globe, so be careful where you use your card and review your statements thoroughly.

For further information on any of these credit card related issues, read the product disclosure statement (PDS) or speak to the card issuer.

Insurance is a way of managing risk. It’s a good idea to check your insurance from time to time but this is particularly important when you’re about to deploy.

Common types of insurance ADF members should check before they deploy include:

• Car insurance
• Home and contents insurance
• Health insurance (for family members)
• Mobile phone, tablet and laptop insurance

If you plan on leaving your home vacant with your possessions still inside, check with your insurer that you will still be covered. Some home and/or contents insurance policies do not provide cover when the owner or occupant is away for more than a certain period.

For cover to continue, there may be conditions placed on you, for example, you may need a friend or family member to regularly visit your home and collect any mail while it’s vacant. These conditions often represent a change to the contract of insurance so make sure you get the agreement in writing.

If you have insurance for personal devices like a laptop or mobile phone that you plan to take with you, find out if you’ll still be covered if you take the device overseas.

Make sure your cover is up to date and that insured values are current.

Depending on where you are deploying to, and for how long, you may not pay tax on some of your earnings. While paying no tax for a period is generally a positive for you, it can throw up a range of issues which you may need further information and advice on, for example if you:

• Receive income assessed benefits – tax free income may lower your taxable income for the assessment of family tax benefits, child care rebates and other benefits. Contact Centrelink to find out how you might be affected.
• Pay child support – you may have to share your additional deployment income and allowances with your child’s other parent. Contact Child Support if this relates to you.
• Claim tax deductions – earning some tax-exempt income may change some of the claims you can legitimately make.
• Have salary packaging arrangements – these may be affected by your absence or may be less tax effective.
• Salary sacrifice into superannuation – these contributions are taxed at 15% when received by the fund, which may make them less tax effective. Consider your annual taxable income and annual super contributions.
• Are eligible for an MSBS retention benefit while on deployment – how you elect to take it and when it is actually paid may affect how your benefit is taxed.

These issues can be complex and need to be considered carefully.  If you think you may be affected by any of these or other taxation issues, we suggest you seek independent professional tax advice from a suitably qualified accountant.

Tax due while you’re deployed?

In Australia, the income tax (financial) year runs from 1 July to 30 June. Individuals completing their own tax return must lodge their return by 31 October each year. If you are using a tax agent or accountant, you will have until 31 March the following year.

If your tax return will be due while you are on deployment, make arrangements with an accountant or registered tax agent to lodge it on your behalf by the due date, or call the Australian Tax Office (ATO) and ask for an extension.

Income and deductions

Generally you will need to declare all of your income, other than tax-exempt deployment or reservist income. The ATO has guides for ADF members on what income must be declared, and what deductions are allowable.

Even if your deployment income is tax-exempt (you’ll be notified if this is the case), non-deployment income and other income, like interest and investment returns will still be taxable.

For deductions to be allowed:

• you must have spent the money yourself and not been reimbursed
• it must directly relate to earning your income
• you must have a record to prove it, or be able to demonstrate how you calculated the claim.

Don’t be tempted to make ‘dodgy’ claims, chances are you’ll be caught and issued with fines and other penalties. The last thing you need is a tax audit.

You can lodge your tax return for free through myGov. To find a registered tax agent near you, go to the Tax Practitioners Board.

If your financial affairs are more complex, you may be better off speaking to a qualified accountant that has completed additional professional training. You can find a list of appropriately qualified accountants on the websites of industry associations such as Chartered Accountants of Australia and New Zealand or CPA Australia.

Some ADF members consider getting financial advice before they deploy, however unless this is urgent, for example, you need to make big financial decisions now, it may be better to wait until you return when you can better focus on your finances.

Financial advice normally includes clarifying your financial goals, identifying your attitude to risk, creating a financial plan and advice on specific investment strategies and products. You’ll find more information in our Getting financial advice money guide, or watch our video, Financial advisers: The Facts and the Fiction.

If you do want to get financial advice before you deploy, the ADF Financial Advice Referral Program may help you find a suitable financial adviser. Please be aware that any financial advice relationship is strictly a private arrangement between you and the adviser, and as such, Defence will not be responsible for any personal advice you may receive.