Year end for savers, investors and employees

With a few weeks remaining to the end of the financial year, this is your last chance to take action to potentially improve your wealth this tax year.

In addition to our separate tips for super, here are 10 tips you might consider for your situation:

  1. Use super contribution to offset realised capital gain
    While probably too late for employees except for those with their own company, if you have realised a capital gain from selling investments like shares or property and have not contributed to the maximum limit, consider making a concessional contribution to super by 30th June.
  2. Make a spouse contribution
    If your spouse earns less than $10,800 this year you can claim a $540 tax offset by making a $3,000 contribution to your spouse’s super account.
  3. Make a spouse super split
    If you are making maximum contributions and your spouse is a low income earner, consider splitting up to 85% of this year’s contributions to your spouse’s super account, to help grow their balance more. This should be done in July as it can only be done in respect of the previous year’s contributions.
  4. If over preservation age, consider starting Transition to Retirement
    This strategy helps grow your super faster while maintaining the same level of cash flow by drawing a tax effective pension to supplement reduced salary after increasing your salary sacrifice amounts, for age 55 or more. Up to 10% of your account can be drawn as pension each tax year.
  5. Review investments
    This is a good time to review your portfolio and decide if assets should be sold to buy new assets early next tax year, using capital losses to offset gains when you rebalance back to your target asset allocation. Remember that managed funds distribute capital as well as income as part of the distributions made in July/ August in respect of the current tax year. Beware of making “wash sales” though, when you immediately buy back the same asset at a higher cost base to use up capital losses and re-set your cost base.
  6. Consider timing new managed fund purchases
    If you will be buying managed funds, consider delaying until after 30 June to avoid receiving some of your money back immediately as a distribution taxed as income. Unit prices typically fall on 1 July when units go ex-distribution.
  7. Claim investment expenses
    Remember to claim costs incurred in the course of earning assessable income, such as ongoing financial advice fees or management fees, which can be deducted against your other income when doing your tax return.
  8. Consider pre-paying or deferring loan interest
    If you have borrowed money to invest in shares or property, consider pre-paying next year’s interest by 30 June to claim in this year’s tax return. However, if you earn over $180,000 it may be better to avoid pre-paying as next year’s tax will be higher if the “Budget Repair Levy” is passed, which appears likely.
  9. Consider pre-paying income protection premiums
    If you have taken out one of the most valuable insurances – income protection – the premium outside super is tax deductible and can be pre-paid by 30 June to claim the deduction this tax year; useful if you are not in the top bracket.
  10. Maximise your deductions including charity
    Make sure you claim all potential deductions for work related expenses (like mobile phone costs, tools of trade like calculators and technical books, briefcases) and also make charitable donations. Work related expenses up to $300 don’t need receipts. Also remember to claim work-related travel expenses or self-education expenses that are related to your current role. Start gathering all receipts for tax time and make sure costs are paid before 30 June.

Please don’t hesitate to call us on 02 9299 7044 if you would like advice on these or any other personal financial matters.

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