Tax Saving Tips to Consider Before the End of The Financial Year

With the end of the financial year around the corner, you’re probably wondering what you can do to minimise your tax bill. There are quite a few things you should consider doing before 30 June.

Prepare for the end of the financial year with our top 6 tax saving tips. By taking action before 30 June, you can potentially reduce your tax bill and save.

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What is the end of the financial year in Australia?

The Australian financial year runs from 1 July to 30 June. At midnight on the 30th of June, the fiscal year ends. Do not confuse this with the tax season, which starts on the 1ste of July and ends the 31st of October. Meaning, you generally have until 31 October of each tax year to lodge your tax return.

For example, we are currently in the 2017 – 2018 financial year. The income you earned during 1 July 2017 to 30 June 2018 should be reported on your 2018 tax return, before 31 October 2018.

Pre-30 June Essential Tax Tips

Now is the time to run through our 6-point checklist and make sure you have everything you need before the end of the financial year.

tip-1Bring forward tax-deductible expenses

Where possible, try to bring forward tax-deductible expenses to the current financial year. Consider what tax deductible purchases you expect to make in the new fiscal year and try to move them forward to before 30 June of this year and benefit from the deduction. This way, you can claim the full deductions in this year’s return. For example, where applicable, try to pre-pay:

  • 12 months’ interest on a margin loan.
  • 12 months’ premiums on your income protection insurance because income protection is generally tax deductible.
  • Work-related utilities, for example, travel expenses, laptops, stationary, etc.
  • Membership fees and subscriptions that are work-related.
  • Repairs and maintenance on any rental properties.
  • Interest payments on investment loans.

tip-2Put money into your super

You can generally reduce your taxable income by maximising your concessional contributions to your superannuation by using what remains of your contribution cap limits in this financial year.

Make contributions before 30 June for it to be counted for this financial year. Salary sacrifice can help increase your superannuation savings and reduce the amount of tax you pay. However, make sure your contributions are within the contribution cap. An excess concessional contribution could be a tax liability. For the 2017-2018 financial year, the concessional contribution cap is $25,000, regardless of your age.

If you earn less than $51,813 per year before tax and make an extra super contribution, you might be eligible to get the government co-contribution of up to $500 per financial year, depending on your income.

tip-3Super spouse contributions tax offset

If your partner’s accessible income is less than $37,000 in the financial year, and you make a super contribution on their behalf, you may be able to claim a tax offset of up to $540 for yourself.

Make sure that the sum of your partner’s available income is less than $40,000 and that they have not exceeded their non-concessional contribution cap for the financial year.

tip-4Increase funds for your retirement

The transition to retirement income stream (TRIS) was designed to help Australians with the transition from employment to retirement, generally allowing for early access to your super in the form of an income stream.

If you have a TRIS, you can usually salary sacrifice up to your annual concession contribution cap, and then receive pension income from the TRIS. This is beneficial in that it will potentially reduce your taxable income while your contributions reside in a concessional taxed environment. Make the standard minimum pension withdrawals

Superannuation members over the age of 65, who have income streams, must withdraw a minimum amount from their pension account before 30 June, as required by superannuation law. If not, you might face tax consequences.

tip-5Defer taxable income

Depending on your circumstances, if you can delay your income until the 1st of July or after, you could have it assessed during the next financial year. However, it’s important to discuss this option with your accountant.

tip-6First home buyers saving for a deposit

If you’re saving for a deposit on your first home, you can put money into your super so that it will be taxed at a lower interest rate, usually at a rate of 15% compared to the 45% for high-income earners. Make the payment to your super fund before 30 June, and you’ll generally be able to claim a tax deduction for the amount through your tax return.

Take note, the total amount of contributions you can withdraw is capped at $15.000 years of $30,000 in total.

Bonus tax saving tips

  • Contact your accountant and/or tax adviser before you do anything as they have the latest information and know your specific financial situation.
  • Start collecting any eligible expenses receipts in preparation for completing your tax return, because you’ll need to show them to ATO when requested.
  • Document any money you’ve received as a deposit for work yet to be completed.
  • Identify any invoices you’ve issued for sales that will take place next financial year by recording it as income in advance,
  • Be wary of tax refund scams where the scammer claims you are eligible for a refund, but to receive the said refund you need to provide your banking details.

Above information is general advice only. We are not registered tax agents under the Tax Agent Services Act 2009; and if you intend to rely on the advice to satisfy liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law, you should request help from a registered tax agent. Please speak with your tax consultant or accountant for more information.

Author: Russell Cain
Published: May 31, 2018
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