TAX PLANNING TIPS FROM A FINANCIAL PLANNER

Tax planning tips from a pro

We are closing in on the last months of the Financial Year – and in preparation – Damian Toms from Burley Griffin Finance Co, my own personal Financial Planner, has prepared a list of his top tips for reducing your tax burden prior to June 30. While it’s not a post directly related to property investing/home loans – I thought it was worth sharing. In addition to this, in the UK there are plans afoot to move accounts and tax on-line, we should be keeping an eye on this developments should Australia look to follow suit.

As always, I recommend seeking personal advice for any strategies you may be considering, as strict limits apply to contributions to super and tax penalties can be large for any mistakes. So please contact Damian if you need any assistance, advice or have questions.

Please also note that I’m not a Financial Planner – and the content below is straight from Burley Griffin Co and is not intended as investment, financial, legal, taxation or any other advice and must not be relied upon as such. You should obtain independent professional advice and make further independent enquiries before making financial, legal, taxation or investment decisions.

Salary sacrifice a bonus into super

If you’re lucky enough to be receiving a bonus before the end of financial year, it may be worthwhile to salary sacrifice this directly into super, paying 15% contributions tax, rather than your marginal tax rate of up to 49%.

Make tax deductible contributions to super

Business owners and the substantially self-employed may make tax deductible contributions to super prior to the end of the financial year. To be eligible to claim a deduction, remember that your super fund must receive the contribution prior to June 30, so be sure to give yourself enough time to make the contribution. This also goes for retirees under age 65 earning taxable income from investments or taxable pensions (eg PSS or CSS).

Pay less tax on investment earnings

Income from investments in your personal name is taxable at your marginal tax rate (up to 49%). It may be worthwhile cashing in these investments and contributing the asset into super, where investment income is taxed at a maximum rate of 15%.

Use super to manage Capital Gains Tax

If you sell an asset triggering capital a capital gain and less than 10% of your income this financial year is from employment, you may be able to invest a portion of the sale proceeds into super and claim a tax deduction. This can offset some of the tax payable from the capital gain.

Boost your partners super and reduce tax

If you have a spouse earning less than $13,800pa and you make an after-tax super contribution on their behalf, you can receive a tax offset of up to $540.

Buy insurance tax effectively in super

By establishing Life or Total and Permanent Disability insurance within super, you can make salary sacrifice or tax deductible super contributions to fund the insurance cost, therefore paying for your premiums with pre-tax dollars.

Pre-pay income protection insurance premiums and reduce this years tax

If you hold a personal income protection insurance, you could pre-pay 12 months worth of insurance premiums prior to June 30 and receive a much larger tax deduction this financial year. Generally, the cost of income protection insurance is tax deductible for employees and the self employed.

Gain from a capital loss

If you have received capital gains from your investments, you can offset these gains by selling a poorly performing asset and triggering a capital loss. The end of the financial year is an excellent time to review your assets and ‘clean out’ your portfolio, ready for the year ahead.

Defer asset sales to save tax

If you are thinking of selling a profitable investment, you may prefer to defer the sale until a future financial year in which your income may be lower. For example, if you will only be working for part of next financial year, it may be worthwhile redeeming a profitable investment next year when your salary income is lower.

Make better use of your refund

Once you have lodged your tax return and receive a tax refund, put it to good use by paying of non-tax deductible debt, or even funding your living expenses whilst salary sacrificing into super to get a kick start on next years’ tax deductions!

If you have any questions or concerns – please don’t hesitate to get in touch with Damian directly at https://burleygriffin.co/contact/ The first meeting for Pass Go referrals is free.

Jamie

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The information herein is not intended as investment, financial, legal, taxation, building, development or any other advice and must not be relied upon as such. You should obtain independent professional advice and make further independent enquiries before making financial, legal, taxation, building, development or investment decisions.