As we we approach the end of the financial year, it’s time to ensure your tax affairs are in order and to consider key tax planning strategies.

Here’s some end of year tax tips:

1. Bring forward Deductions

Any expenses to be claimed in the 2018 financial year need to be paid prior to June 30, so it can be valuable to take a look at any expenses that may be able to be paid now and bring the deduction forward. Examples of this can be prepaying interest on investment loans or margin loans.

2. Donations

If you were thinking about making a donation to your favourite tax-deductible charity, now’s the time to make the donation to claim the tax deduction this financial year.

 3.  Make a Superannuation Contribution

Tax deductions for your superannuation contributions will only be available in the 2018 tax year if the contribution is received by the superannuation fund by 30 June 2018.

NOTE: if you have more than $1.4m in superannuation, please check with your Accountant before making any contributions.  

Contribution limits

For the 2017/18 financial year, non-concessional (or after tax) super contributions are capped at $100,000 per person per year or $300,000 over three years using the bring forward provisions.

Concessional contributions, or those made with pre-tax money, are currently limited to $25,000 per person per year.

If you are 65 you need to make sure you meet the work test before making a contribution. If you are 75 then you cannot make further contributions.

If you have more that $1.6m in superannuation you should also check before making any contribution.

4. Make a Super co-contribution

If you earn less than $36,813 (including reportable fringe benefits and reportable superannuation contributions) and make an after-tax contribution to super of $1,000, you will be eligible for the maximum super co-contribution of $500 from the Government. The co-contribution amount reduces by 3.33 cents for every dollar of income over $36,813 and phases out completely once you earn $51,813.

The ATO uses information on your income tax return and contribution information from your super fund to determine your eligibility.

5. Consider Super splitting

If you want to split your super contributions with your spouse, this can only be done in the year after the contributions are made.

Therefore, from 1 July 2017, you are able to split up to 85 per cent of any concessional (or pre-tax) contributions you made during the financial year with your spouse.

This is a particularly useful strategy if you are approaching the $1.6m threshold.

6.  Salary sacrifice into Super

A salary sacrifice strategy allows you to make contributions to super from your pre-tax salary. Your salary is then reduced by the amount you choose to sacrifice and the benefits of this are two-fold: not only does your super balance increase, but this strategy could also reduce your taxable income and therefore the amount of tax you pay.

Superannuation contributions are concessionally taxed at just 15 per cent (up to 30 per cent for individuals with income over $250,000) instead of your marginal tax rate, which could be as high as 49 per cent – leaving you more to invest in super.

7. Realise any capital losses

A capital gain arising from the sale of an investment property or shares may be offset by capital losses.

For example, you may have had to sell investments that were no longer appropriate for your circumstances and any capital losses realised as a result can be offset against any capital gains you have realised throughout the year.

Unused losses can be carried forward to offset gains in future years

8. Income protection insurance

If you hold an income protection policy in your name, then any premium payments you make are tax deductible. So, be sure to take the opportunity to review your insurance

9. Investment Property deductions

If you hold an investment property now may be the time to consider doing any minor repairs and maintenance, taking the time to shop around for insurance now can help you get a better deal

10. Small Business Immediate Write Off

Eligible small businesses can claim an immediate write off for assets costing up to $20,000, this has some significant impacts for businesses that have the need and cash flow for larger purchases.

 

If you have any queries on end of year tax planning strategies, please contact Patrick Rowan & Associates, Accountants Geelong.  Tel: 5221 7655

 

These materials are intended to be used as a guide only.  They should not be relied upon as a substitute for professional advice regarding actual facts or circumstances.

Patrick Rowan & Associates, its employees and agents do not accept any liability for any injury, loss or damage resulting from any person acting, or refraining to act, in reliance on all or part of these materials.