Ways to maximise your tax return
June 30th is just around the corner, here are a few things to consider ways to maximise your tax return.
PREPAY YOUR BILLS
If you can pay some bills that may be due next financial year, before the end of this financial year, you can claim those expenses as soon as you lodge your tax return.
TOP UP YOUR SUPER – SAVE TAX NOW SO YOU CAN SPEND MORE LATER
We all have an annual concessional contribution cap of $25,000. In plain English, this means you can contribute $25,000 into superannuation every year and receive a tax benefit for doing so. The $25,000 includes your 9.5% super guarantee. E.g. if your employer contributes $10,000 to your super fund, you may be able to contribute a further $15,000 into your super as a concessional contribution. You don’t have to reach the maximum concessional contribution of $25,000. Any extra amount you can afford to add to your superannuation will benefit you in the long run and reduce tax payable in the year the contribution is made.
How does that work? Superannuation tax rate is lower than your marginal tax rate
Earnings on superannuation benefits are taxed at a maximum rate of 15%. If your marginal tax rate (MTR) is higher than 15%, contributing to super could help you reduce your tax payable. E.g. if you are earning between $87,001 and $180,000 your marginal tax rate is 37%. If you contributed $15,000 into your super instead of taking that money as income, you could be savings 22% tax on that money (37% -15% = 22%), and you’ll be putting more money away for your future.
At this time of year, the easiest way is to top up your super is to make the payment to your super fund well before 30th June and then claim a tax deduction for the payment through your tax return. Please DO NOT leave this until the last minute. If the extra repayments are not cleared by your super fund by 30th June, your contributions will be made in the next financial year, which will still help you in the long run, but you won’t be eligible to claim a tax deduction for this financial year.
Call your super fund and ask them what the last day they will accept super contributions for processing this financial year.
If you need access to your money before you reach preservation age (currently between 55 and 60, depending on when you were born) this may not be an appropriate strategy for you.
DO YOU WORK FROM HOME OR TAKE WORK HOME WITH YOU?
If you work from home, or take work home with you, you may be entitled to claim some of the expenses of your home office, including:
A percentage of your rent;
Heating, cooling, lighting and cleaning;
Home office furniture and fittings, equipment and computers;
Stationery, phone and internet costs;
Speak to your accountant about these expenses. The deduction allowable is based on the amount of time you spent working from home and also the floor area of the home office you use to work.
USE YOUR CAR OR PHONE FOR WORK?
You may also be able to claim a deduction for business related car and phone use. You’ll need to keep a log of your business/personal use over a four-week period, so your accountant can apply that percentage throughout the entire year. You cannot claim a tax deduction on items that you have an allowance for, or that your employer pays for.
BUY A NEW WORK BAG, UPGRADE AND RESTOCK ALL WORK-RELATED ITEMS BEFORE 30TH JUNE.
There are two really good reasons for this. You’ll get reduced prices because of end of financial year stock take sales, and any purchases you make now can be deducted in your tax return from 1st July 2018.
Remember, if you carry files and computers for work, you can claim a tax deduction for the cost of your briefcase, laptop carry bag, compendium, a tote bag, or large handbag.
YOUR VERY OWN STOCKTAKE SALE
If you’ve sold investments for a profit this financial year, congratulations! You now need to work out the amount of capital gains tax you are liable to pay.
Do your own stocktake sale and see if you have any assets showing capital losses that you could dispose of before June 30th. You may be able to crystalize a capital loss which may offset and reduce the amount of capital gains tax payable.
SHOW A LITTLE KINDNESS
The end of the financial year is a great time to donate. Charitable gifts can help reduce your tax payable, increase love and kindness in the world and enhance your sense of wellbeing at the same time. That’s what I call a win, win, win.
Contact me at nicole@nicolehealesfinancial.com.au , 0417 167 024 or 03 8610 6678
www.nicolehealesfinancial.com.au
Nicole Heales is an Authorised Representative No 312479 of Capstone Financial Planning Pty Ltd Australian Financial Services Licence No 223135 and a Credit Representative No 408933 of Crown Lending Pty Ltd Australian Credit Licence No 388279
Disclaimer
This article dated 26th April 2018 is given in good faith and is derived from sources believed to be reliable and accurate as at this date, which may be subject to change. It should not be considered to be a comprehensive statement on any matter and should not be relied on as such. Information contained in this article is of a general nature only. It does not constitute financial or taxation advice. The information does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this article.
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