To get the most money from your annual tax return, there is a lot to consider. Here is a short checklist of options that could open the door to some tax savings opportunities.
The key here is to plan ahead.
Deductions — lower your tax liability
Pay some of next year’s expenses now
Pay for certain expenses before June 30 if you have spare cash available. This can help you get your tax break back from the ATO earlier. Whereas expenses paid in July may leave you waiting more than 12 months for the return.
Prepaying interest on an investment loan is a popular expense in this category. Be careful though – 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 back them up.
Get cash back for insuring your income
You can claim the premiums 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 covers such as life, critical care, or trauma cannot be claimed. You also can’t claim deductions for premiums 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. This is also a good time to review your superannuation contributions to date and take advantage of the annual caps.
Salary sacrifice or concessional contributions
For these types of tax-deductible contributions, the annual limit 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 this year? Do you need to review and adjust your current arrangements?
Whether working or retired, anyone under 65 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.
One final point on super contributions – the total contributed is based on how much is received by your fund, not when you sent it to the fund. Another reason why planning ahead is crucial.
These are just some of the ways to manage how your money is taxed. Other options may be available, depending on your circumstances. Your Think Big adviser can help you achieve what is best for you this financial year. But please don’t leave it too late.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.