Lower Your Tax Liability
- 360South
PAY NOW FOR SOME OF NEXT YEAR’S EXPENSES
If you have some spare cash available,
paying for certain expenses before June 30 could mean you get your tax break
back from the ATO earlier. Expenses paid in July could leave you waiting more
than 12 months for the return. A popular expense in this category is prepaying interest
on an investment loan, but be careful because not all expenses qualify for a
tax deduction in advance.
This year the ATO is focusing on
work-related expenses. If you are planning to claim expenses for things like a
home office, mobile phone, tools and equipment, etc, make sure you claim only
eligible expenses and have the paperwork to substantiate them.
CASH BACK FOR INSURING YOUR INCOME
You can claim the premiums you have paid
for your income protection insurance as a tax deduction. Note that you can only
claim the portion of the premium that covers you for loss of income, not for
any benefits of a capital nature. Premiums for other personal insurance cover
such as life, critical care or trauma cannot be claimed. You also can’t claim
deductions for premiums that are paid from your superannuation contributions if
your policy is held in your fund.
SUPER
CONTRIBUTIONS — DON’T WASTE THE LIMITS
June 30 is not just about deductions for
expenses. It’s also a good time to review your superannuation contributions to
date and take advantage of the annual caps.
SALARY SACRIFICE OR CONCESSIONAL
CONTRIBUTIONS
The annual
limit for these types of tax-deductible contributions is $25,000 per annum,
regardless of age. If you’re an employee, this limit covers both employer super
guarantee and salary sacrifice contributions.
How much has your fund received in
contributions so far this year? Do you need to review and adjust your current arrangements?
AFTER-TAX CONTRIBUTIONS
Anyone under 65 (whether working or
retired) can contribute $100,000 each year to super as after-tax or non-concessional
contributions. You can also contribute $300,000 in a single year by bringing
forward the limit for the following two years. But – when it comes to super
there’s usually a ‘but’ – check your total super balance to ensure any extra
contributions do not exceed the general balance transfer cap of $1.6 million
for 2017/18.
And one final point on super
contributions – the total contributed is based on how much is
it to the fund. Another reason why
planning ahead is crucial.
These are just a few ways to manage how
your money is taxed. Depending on your circumstances, other options may be
available. Our advisor can work with you to help you achieve what is
best for you this financial year. But please don’t leave it too late.
