A lot of people leave their preparation for the end of the financial year until it is too late. If you feel that your finances could do with a shake-up before June 30, there are many tax-effective strategies that we can help you implement now to ensure that the end of June runs as smoothly as possible.
Keep your receipts
The most common reason why people don’t take advantage of tax deductions is simply because they don’t keep receipts. While keeping receipts for big ticket items is necessary, you don’t always need a receipt for the smaller items such as stationery and books. If the total amount you are claiming is $300 or less, you need to be able to show how you worked out your claims, but you do not need written evidence.
A tax deductible way to manage risk
Income protection insurance is an essential part of any financial plan, designed to secure your family’s lifestyle in the event of illness or injury.
Income protection insurance premiums are generally tax deductible, so if you purchase income protection insurance and pay your annual premium before 30 June 2017, you may be able to include the deduction in this year’s tax return. Business owners may also be able to claim deductions on their business insurance premiums.
Claim your uniform
If you are a tradesperson or if you have to wear a uniform for work you might find the clothes or the laundry expenses are tax-deductible.
Splitting income with your spouse
Investing in your spouse’s name can reduce, or even eliminate, the amount of tax paid on the investment income. This is true if your partner has a lower marginal rate of tax or is earning less than $20,542 per annum.
Splitting income with your partner can be as simple as having your cash reserves (excluding your everyday bank account) in the name of the partner with the lower marginal tax rate.
Private health insurance
The Government made significant changes to the Medicare levy surcharge and the private health rebate from 1 July 2012. If you are currently paying the Medicare levy surcharge and want to avoid it in the future financial years, you should consider taking out private health insurance before 30 June to avoid paying the surcharge again.
Even though you might have private health insurance, you may find, based on your circumstances and income, your private health rebate has reduced this financial year ending 30 June 2017. To ensure that you understand the full impact, contact your health fund.
Salary sacrifice into super
Super can be a tax-effective investment. If you’re an employee, you could look
at contributing to super through salary sacrifice, thereby reducing your taxable income. In the long term, salary sacrificing has many benefits as it not only helps to increase your super savings but could also reduce the amount of tax you pay. You could even salary sacrifice your annual bonus into super, but this needs to be arranged in advance with your employer.
Additionally, the reduced salary amount that you actually take home would then become your assessable income for tax purposes. This may enable you to move down a tax bracket, reducing your amount of total tax payable.
Speak to us today
Of course, there are many other strategies we can put in place, based on your individual circumstances and financial goals. Speak to us to take the stress out of your tax planning.