Smart ways to save tax before the end of financial year

save tax 2

Pass on these tips to your family, friends & kids.

By Olivia Maragna   SMH  9 June 2016

The end of the financial year is rapidly approaching and planning is somewhat harder this year with a federal election a few days later that result in changes to taxation, superannuation and even negative gearing.

With only a week to go, now is the time to ensure you make the most of the current rules while you can.

Here are some top tips to consider to minimise your tax and boost your savings.

Pay and delay

Look for ways to pay tax-deductible expenses now and delay income until July where your taxable income is likely to be higher this year than next.

Consider pre-paying 12 months’ interest on a margin loan or premiums on your personal income protection insurance or pre-paying subscriptions, conferences and membership fees for professional associations.

If you are able to, try to defer income until after June 30 to avoid paying tax this financial year.

As an example this may be done by reviewing term deposit maturity dates or legitimately deferring income by holding off issuing invoices until July 1.

Give a little

If you are thinking of making some donations, you may be able to receive a tax deduction for gifts and receive that deduction this financial year.

Property owners

If you have an investment property, consider doing minor repairs and maintenance prior to the end of financial year.

Salary sacrifice

Why not sacrifice your last pay or bonus and save tax?

An individual on a salary of $90,000 per year will save tax of $1,850 by sacrificing $5000 into super.

Do your figures to ensure it is beneficial for your own circumstances.

Money for free

If you have employment income of less than $35,454 this financial year and make an after-tax contribution to super of $1000, then you are entitled to a government co-contribution of up to $500.

The co-contribution tapers out once you earn $50,454.

Calculate your optimum co-contribution amount here – it’s easy.

Spouse contributions

If your spouse earned less than $13,800 this financial year, you can claim a tax rebate of up to $540 if you contribute on their behalf.

Max at $10,800.

Get in quick

If the budget measures are passed, then the annual pre-tax (concessional) superannuation contribution limit will be reduced to $25,000 for everyone from 1 July 2017.

The limit currently is $30,000 or $35,000 for people aged 49 or more.

If you have the funds to support it, consider taking advantage of these higher caps before they are reduced.

Top up your super

If you have surplus funds in your own name, consider making additional contributions into your superannuation fund.

The cap for non-concessional (after tax) contributions is $180,000 per year or if the proposed changes announced on Budget Night (effective May 3, 2016) are passed then a Lifetime Cap of $500,000 will become effective.

If you haven’t already exceeded this Lifetime Cap, you may consider to top up your super but be wary.

This is the one big change announced by the current Government that is currently causing issues as members will need to obtain contribution history as far back as 2007 to determine whether members have exceeded this cap already.

Reduce capital gains

Your investments will move around in value and you may be sitting on some paper losses from shares or other investments.

This could be a good time to sell some of your poor performers to offset against capital gains made on the sale of other investments over the past 12 months.

Don’t leave it to the last minute

An important point to remember in any conversation about tax planning is that you need to consider your personal circumstances and ensure you are doing what is best for you.

June 30 falls on a Thursday this year, so ideally any strategies or contributions should be finalised by Monday, June 27 [or in some cases Friday 24 June] to be included in this financial year.

Why not increase the financial savviness of those around you – pay it forward and pass on these tips to your family, friends and kids.

Original article here

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