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Get your Tax ready for June 30 – NOW!

When it comes to getting the most (money) from your annual tax return, there is usually a lot to think about, so we’ve identified a few options that could open the door to some opportunities to save on tax. The key here is to plan ahead

Deductions — lower your tax liability

Pay now for some of next year’s expenses

If you have some spare cash available, paying for certain expenses before June 30 could mean you get your tax break back from the ATO earlier. Expenses paid in July could leave you waiting more than 12 months for the return. A popular expense in this category is prepaying interest on an investment loan, but be careful because 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 substantiate them.

Cashback for insuring your income

You can claim the premiums you have 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 cover such as life, critical care or trauma cannot be claimed. You also can’t claim deductions for premiums that are 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. It’s also a good time to review your superannuation contributions to date and take advantage of the annual caps.

Salary sacrifice or concessional contributions

The annual limit for these types of tax-deductible contributions is $25,000 per annum, regardless of age. This is set to increase to $27,500 from 1 July 2021. If you’re an employee, this limit covers both employer super guarantee and salary sacrifice contributions.

How much has your fund received in contributions so far this year? Do you need to review and adjust your current arrangements?

After-tax contributions

Anyone under 65 (whether working or retired) can contribute $100,000 each year to super as after-tax or non-concessional contributions. This is set to increase to $110,000 from 1 July 2021. You can also contribute $330,000 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 the balance is $1.4 million or less on 30 June for you to be able to bring forward your next two years of caps. This would allow you to make a total of three years’ worth of after-tax contributions ($300,000 in total if contributed prior to 01/07/21 and $330,000 in total when contributed after 01/07/21).

And 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 a few ways to manage how your money is taxed. Depending on your circumstances, other options may be available. Our Tax Department can help you achieve what is best for you this financial year, don’t leave it too last minute.

Click here to book your appointment with one of our accountants.

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