With 30 June in the past check out the Top Ten Tax Tips below to see if you could benefit from one of these end of financial year strategies.
1. Government Co-contribution - if you aren't familiar with this scheme and how you can benefit from it, consider viewing a short video I have produced explaining the Government Co-contribution. There is also a calculator to determine how much you should contribute to superannuation to achieve optimum benefit from the scheme. The www.mastermymoney.com.au website referred to in the video will be launched in the next couple of months but is not yet available.
2. Spouse Contribution - If your spouse earns less than $10,800 you could benefit by contributing up to $3,000 into your spouses superannuation fund to and receive a $540 rebate. A rebate means you get to keep $540 that you would have otherwise paid in tax.
3. Deductible contribution - if you are eligible, offset a capital gain you may have incurred with a deductible contribution to your superannuation fund.
4. Pre pay interest - I am not a big fan of margin loans but if you do borrow money to invest you could consider paying the next 12 months interest expense prior to the 30th of June to receive the tax benefit this financial year rather than having to wait until after the next financial year.
5. Work related expenses - pay for any work related expenses that may be falling due prior to 30 June to claim the tax deduction in this year’s tax return. Work related expenses may include items such as subscriptions to associations, seminars, conferences, education workshops, books, journals, computers, software and protective clothing.
6. Income Protection Insurance Premium - You can pay your Income Protection Insurance Policy Premium before June 30th to benefit from the tax deduction this financial year rather than waiting more than 12 months to receive the benefit. A tax deduction reduces your taxable income by the amount of the deduction. It is not as beneficial as a rebate.
7. Donate - to tax deductible organisations prior to the 30 June and reduce the tax you pay this financial year. This not only lowers the tax you pay by reducing your taxable income but also benefits the organisation you give to.
8. Offset capital gains with losses or vice versa - if you have capital gains or capital losses consider any assets sales that you could complete prior to 30 June to offset the losses or gains depending on which is more beneficial to you.
9. Self employed - schedule invoices to be due after the 30th June and consider the Simplified Tax System (STS). STS allows immediate write-offs for a plant costing up to $1000 (including GST) and the use of pooling of assets over $1000 to gain accelerated rates of depreciation.
10. Start planning for next year now - tax planning isn't really about what you can do just before 30 June each year. The best approach is to make your plans at the start of the financial year to make sure you take advantage of all of the strategies available to you, including strategies such as salary sacrificing.
Whether it is year end tax planning, giving decisions, estate planning or any other financial decision it is important that the tail doesn’t wag the dog i.e. you first need to decide what your goals are and then use the best techniques to achieve them rather than making ad hoc decisions based on techniques for reducing income tax.
If you know someone who could benefit from these Top Ten Tax Tips you can forward it to up to 5 of your friends at a time by clicking here.
Wishing you a very Happy New Financial Year.
Warm regards
This newsletter does not take into account the personal objectives, financial situation or needs of any person. You should consider the appropriateness of the information having regard to your own objectives, financial situation and needs and obtain professional financial advice prior to making any decision.