We still cannot believe it is that time of year again! Christmas feels like it was only yesterday, but June 30 is now only 53 days away!
That being said, we are getting in our tax planning early this year so that it is front of mind for you to really help you and your family reduce your tax exposure and maximise the opportunities available to you.
Our top 10 tips are similar to last year but with a few important additions.
- I’d recommend reading Armen’s blog post on end of financial year mortgage and finance planning essentials as there is a great case study there.
- I’d also recommend watching David’s quick 3-minute video on potential tax opportunities with your super.
If you have any questions at all, make sure you contact our amazing team on 1800 93 10 20.
10 Tax-Time Tips
While you might not be flush with cash right now and be able to put large amounts of money into superannuation, it’s important that you are aware of how you can potentially maximise your super balance and reduce your tax at the same time. These first three tips below focus specifically on super.
Just a reminder that the concessional contribution cap of $25,000 available to all eligible individuals for 2018-2019 year. The tax-deductible super contribution limit (or “cap”) is $25,000 for all individuals under the age of 75 (you’ll need to pass a work test if you’re over the age of 65). See David’s video and article for more information on this point.
1. Top up your superannuation – now.
Consider making the maximum tax-deductible super contribution this year before 30 June 2019 because this is now available to all eligible individuals.
The advantage of this strategy is that superannuation contributions are taxed at between 15% to 30% compared to typical personal income tax rates of between 32.5% and 47% – and you’ll be building wealth for your future.
Remember, this is available to those PAYG employees who receive employer contributions to super as well as the self-employed and those who earn their income primarily from passive sources such as rental income.
2. Make a super contribution on behalf of your partner.
3. Get the government to co-contribute into your super.
4. Pre-pay expenses before june 30.
To minimise your tax debt this year, is there anything that can be bought or pre-paid prior to the EOFY (June 30)? For example, if you are thinking of purchasing home office equipment under $300, such as a printer or monitor, consider buying it before June 30 to claim the deduction this year. Another example might be to prepay a 12-month subscription for your favourite work journal or magazine.
For those with rental properties, look at paying your council rates, strata or water before June 30 to ensure it is deductible in the 2018/2019 tax return. Perhaps contact your bank to see if you are able to prepay 12-months of interest.
Armen has written a great article about prepaying interest, make sure you check it out.
5. Review the ownership of your investments.
A longer-term tax planning strategy can be to review the ownership of your investments. Any change of ownership needs to be carefully planned due to capital gains tax and stamp duty implications. Please seek advice from us prior to making any changes.
Investments may be owned by a Family Trust, which has the key advantage of providing flexibility in distributing income on an annual basis and the ability for up to $416 per year to be distributed to children or grandchildren tax-free.
6. Arrange a property depreciation report.
If you have a rental property, a Property Depreciation Report (prepared by a Quantity Surveyor, such as BMT) will allow you to claim depreciation and capital works deductions on capital items within the property and on the property itself.
The cost of this report (which is deductible in itself) is generally recouped several times over by the tax savings in the first year of property ownership.
7. Keep an electronic motor vehicle log book.
8. Get your financial world sorted.
At Orbit, we love our tech and we have found the BEST app to get your financial world sorted – all from the ease of your phone!
In regards to your tax, MyProsperity, your Personal Wealth Portal, makes it easy to track your spending on tax deductible items with the help of live feeds from your bank accounts and other tools to ensure that you never miss a tax deduction again. Plus, at tax time, it’s as simple as clicking one button to provide us with everything that we need to complete your tax return.
But it does so much more than just tracking tax deductible items, so read more about it here, or contact Kate for more information.
9. Realise any capital losses and reduce gains.
Neutralise the tax effect of any capital gains on your investments you have made during the year by realising any capital losses – that is, sell the asset and lock in the capital loss. These need to be genuine transactions to be effective for tax purposes.
10. Defer investment income & capital gains
If practical, arrange for the receipt of investment income (e.g. interest on term deposits) or the sale of capital gains assets, to happen AFTER 30 June 2019.
Note that the Contract Date (not the Settlement Date) is generally the key date for working out when a sale or purchase occurred.
As always, contact us today on 1800 93 10 20 if you have any questions about the above. The sooner we get started, the sooner we can help you save tax – well before 30 June for sufficient time to implement tax saving strategies.
