The end of the financial year is upon us, and in what is typically a very busy time of year, we’ve prepared a summary of some of the items you should consider before June 30:
Income & Expenses – Deductions
Did you spend money on work or income related expenses that weren’t reimbursed by your employer, business or able to claim so far, this financial year personally?
You may be able to claim these in your tax return. Some examples of deductions include:
Work-related deductions
Car and travel expenses
Home office expenses
Education and professional development
Laundry and dry-cleaning expenses
Registrations, memberships
Tools, equipment, and depreciable assets (such as laptops)
Salary Sacrifice super contributions
Professional Advice Fees
Investment expenses
Insurance Premiums
Charitable donations
You can see the full list of deductions and their associated rules on the ATO’s website here.
Capital Gains & Offsets
Did you sell some assets and incur a capital gain? You may be required to pay capital gains tax unless you are able to offset this tax requirement with current or capital losses that you are carrying.
Medicare Levy
No matter how much you earn you must pay 2% of your taxable income for the Medicare Levy.
However, if you earn over $90,000 you may also be required to pay a Medicare levy surcharge of 1%-1.5% of your taxable income if you don’t already have private health insurance. In some cases, depending on your income, it is cheaper to pay for private health insurance than it is to pay the surcharge, with the added benefits of having cover for various medical expenses.
Superannuation
Super is a great avenue for using surplus cash flow to prepare for retirement. Concessional and non-concessional contributions allow you to contribute additional money into your superannuation to help you save and grow your wealth for retirement in a more tax efficient environment.
Concessional Contributions
These contributions are made to your super on a before tax basis. They include employer’s compulsory super contribution, ongoing salary sacrifice arrangements, and personal deductible contributions.
Concessional contributions attract a 15% tax deduction. These contributions are however capped at $27,500 per year however depending on your individual circumstances you may be able to make additional contributions of this nature via the catch-up contributions’ provisions.
Non-Concessional Contributions
These contributions are made from “after tax” dollars. Again, contributing additional funds to super in a tax-concessional environment will prove beneficial to your retirement strategy.
These contributions have a maximum yearly cap of $110,000 each financial year so it is important to put any funds you want to use towards this inside your super before June 30. In certain circumstances using the “bring-forward rule” this can be raised to up to $330,000.
Contribution Splitting
In certain circumstances, a member of a couple can split up to 85 per cent of concessional contributions with their spouse.
Government Co-Contributions
If your assessable income is below $41,112 and you are under 71 you can make non-concessional contribution of up to $1,000 to super and the government will co-contribute up to a maximum of $500 into your super.
If have any questions or wish to explore any end of financial year strategies further with your adviser, please contact your adviser at your earliest convenience.
If you’d like to discuss your current situation or have any questions please contact us.
The information contained within this website does not consider your personal circumstances and is of a general nature only. You should not act on it without first obtaining professional financial advice specific to your circumstances. Before purchasing any financial product, always consider the relevant Product Disclosure Statement (if applicable) which provides full details of risks, terms and conditions.
Some details (including names) have been modified for privacy purposes and assumptions have been applied regarding future interest rates, investment returns, the client’s circumstances and other financial and economic variables for illustrative purposes – actual outcomes may vary.
