2017 is in full swing, in fact, it is nearly half done. For the working realm in Australia, the middle of the year (30 June to be exact) means end of the financial year as we know it. The end of financial year, or tax time, normally means, the end of which account books are closed, profit and losses calculated, and financial reports are prepared for businesses and individuals.
We all have to pay tax but things can be done to minimise your tax and boost your savings. Here are my 7 top tips before the 7th month.
7. Give a little just like Mr Gates and President Trump.
Consider giving to charity. Making donations to a charity of your choice before 30 June gives you the ability to receive a tax deduction, doing good for your finances and the world.
6. Insure what pays for your lifestyle. Your income.
Protecting your income with insurance has its tax benefits and provides you a lifeline in the form of monthly payments of your income if you are unable to work. Pre-paying the yearly amount of insurance premiums can maximise your tax deductions, as can pre-paying investment loans and the like.
5. Nothing in life is free, except this (while it lasts).
If you have employment income of less than $36,021 this financial year and make an after-tax contribution to super of $1,000, then you may be entitled to a government co-contribution of up to $500.
3. Be like Superman and think super. Boost your wealth and tax savings.
As of 1 July 2017, the annual pre-tax (concessional) superannuation contribution limit will be reduced to $25,000 for everyone.
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. Salary sacrificing is a powerful tool for reducing tax and boosting your wealth.
For example, an individual on a salary of $90,000 per year will have a whopping tax saving of $7,421 by salary sacrificing $21,450 over the year.
2. Take advantage of your chosen career path
Many expenses that you accumulate through your chosen career path can be claimed in your tax return.
Mobile phone payments, travel and accommodations, internet, car payments and fuel are all examples of claimable expenses. For example, a journalist may be eligible to claim Pay TV as a tax deductible expense due to them needing it to go about their day-to-day work requirements, so long as it is a direct consequence of their work. Nearly every profession is covered for self-education, again, so long as it is related to the tax payer’s current employment position.
For certain advice on tax deductible expenses consult with your accountant for specific industries and occupations.
1. Number 1 rule is to seek professional advice.
The end of the financial year takes into account many areas of advice – superannuation, investments, insurances and of course, tax planning. An important point to remember in any conversation about tax planning is to actually have a plan and advice around the plan.
When doing your tax return, make sure you seek the advice from professionals. For instance, they could help with advice of the selling down poor performing assets to offset the sale of investment to reduce capital gains and advise on the right insurance cover for your needs. Additionally, they can advise on the structuring of payments, such as pay and delay, to pay off tax-deductible expenses before 30 June, and delay income until after 1 July where your taxable income is likely to be higher this year than next.
Tax time doesn’t have to be difficult, and with proper advice and planning, it can be your favorite time of the year.
This article was written by CQUniversity alumnus Dimitri Kondilis (BFinPlan), Financial Adviser at Soundbridge Financial Services. Please note that this content does not necessarily reflect the views of CQUniversity. Please note that articles are published at our discretion, and we will not publish content that is focused on religion or politics, or that does not align with CQUniversity’s values.
General Advice Warning
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.
Dimitri Kondilis is an Authorised Representative of GWM Adviser Services Limited ABN 96 002 071 749, trading as MLC Financial Planning an Australian Financial Services Licensee, Registered office at 105 –153 Miller St North Sydney NSW 2060 and a member of the National Australia group of companies.