As June 30 approaches, it’s time to consider tax planning. Below, I have summarised 12 commonly used strategies to consider. Where appropriate, I have added links to where further information can be found. These tips are general in nature, so please contact me and/or consult your tax adviser or Accountant for more specific advice.
Time Until 5pm June 30th
Assess income changes: Determine if your income will significantly change between the current and next tax year. Bringing deductions into the current year can be beneficial if you anticipate a lower income next year.
Work-related expenses: Claim costs directly related to earning income that haven’t been reimbursed by your employer.
Home office expenses: Deduct additional work-related expenses incurred while working from home, such as electricity, phone, internet, and equipment. Choose between fixed rate (simpler) or actual costs method (more burdensome).
Prepay interest/insurance: Prepay 12 months of investment loan interest or income protection premiums to claim the full cost in the current tax year.
Review asset ownership: Transferring investments to a spouse or superannuation fund/trust may reduce future tax bills. Seek advice due to potential capital gains tax consequences triggered when changing asset ownership.
Manage capital gains: Consider the impact of gains/losses on your current and future tax position, especially if investments have been sold or if triggering losses may be beneficial.
Contribute to superannuation: If working and below 75 years old, make a personal tax-deductible contribution to reduce taxable income, a contribution cap of $27,500 applies for the 2022–23 financial year.
Carry forward unused concessional superannuation contributions: Those with superannuation balances below $500,000 , can carry forward unused concessional contribution amounts from previous tax years, this strategy can offer very significant tax benefits.
Government co-contribution: Earn less than $42,016? The government will contribute 50% ($500) of any after-tax contribution you make to superannuation up to a maximum of $1,000. Higher incomes reduce the contribution ratio and it shades out completely at $57,016. A fool proof way to get a guaranteed 50% return on your investment!
Contribute to a low-income spouse: Get an 18% tax offset on the first $3,000 contributed to your spouse’s superannuation account if they earn under $40,000. Tax offsets (reduce final tax bill) are more beneficial than deductions (reduce taxable income).
Tax-free income from superannuation: Once you reach age 60, regardless of employment, you can draw tax-free income from superannuation. This may allow you to accelerate the repayment of debt or increase the level of tax-deductible contributions you can make to superannuation.
Tax-deductible donations: Finally, if all the above fail you, donations over $2 to Deductible Gift Recipient (DGR) charities or organisations are tax deductible.
For more specific advice, contact your tax advisor or consult with me directly. Reach out via mobile on 0438383513 or schedule a call/zoom meeting using the provided link (some early evening time slots are available): https://bpmfinancial.com.au/book-an-appointment
Ben Maw CFP®
Adv. Dip FS (Financial Planning)
Authorised Representative # 253314
BPM Financial Pty Ltd
Information provided in this newsletter is general in nature and does not constitute financial advice. Please review our General Advice Disclaimer here: https://bpmfinancial.com.au/general-advice-disclaimer/
BPM Financial Pty Ltd, Authorised Representative No. 344410 of BPM Fin Pty Ltd AFSL 542821.