Pre June 30 2016 Checklist
It is approaching June 30 again, and you may be looking for some last minute ideas on reducing your taxable income. With for some of you only one pay left this financial year it could be worth salary sacrificing your whole pay with a view of topping up towards your age based cap. Give us a call to discuss.
Income Protection: If you have been thinking about obtaining some personal income protection, premiums are tax deductible for this year if paid before 30 June. If it has paid for in your superannuation fund then that fund will probably claim the deduction and you cannot claim it individually.
Capital Gains Tax: Capital losses are offset against capital gains, so if you have a gain for the year already and have an asset that can be disposed at a loss, it is worth doing in the current year to offset the gain. Losses can be carried forward if not used up.
Delay income: Depending on your circumstances, you may be in position to delay income until July 1 or later in order to have it assessed during the 2015/2016 financial year. This requires careful consideration as to whether you will have more or less income the following year and should should be discussed with your accountant.
Maximise your deductions: Allowable deductions, such as repairs and maintenance on a rental property, are used to reduce your year-end taxable income. There are two considerations here – first, ensure that you are claiming all of your allowable expenses from the year to date and second, consider what purchases you expect to make in the new financial year and whether you can move them forward into the current year and benefit from the deduction.
Donations: Donations or gifts of $2 or more to approved organisations and charities are tax deductible. Ensure you keep receipts from any donations over two dollars to approved charity organisations in order to claim them as a deduction.
Make prepayments: Interest prepayments on a rental property is an option that allows you to make payments now for the coming twelve months, being able to claim them as an expense for the current year. Talk to your bank as to how to do this before 30 June.
Motor vehicle expenses: While the government announced a change to motor vehicle expenses for business use in this year’s Federal budget, the existing calculations will still be in place for the current financial year. You have the choices of: 12% of the original value of the vehicle, the cents per kilometre method, one third of the actual expenses or the log book method. Remember that the last two require records of actual expenses.
Salary sacrifice a bonus: You may be able to optimise your tax position by salary sacrificing any end of year bonus into super. There are important considerations that need to be addressed in this regard to ensure it is tax effective and to ensure contribution caps are not breached.
An important point to remember in any conversation about tax planning is that this year the 30th of June falls on a Tuesday, so ideally any strategies or contributions should be finalised (BPay and Direct Transfers) by Friday 26 June to be included in this financial year.