The end of the financial year is almost here, so now’s the time to review what strategies you can use to minimise your tax, and maximise your refund before you file your online tax return with Refund Express.
Your end of year tax planning starts now. There is no time like the present, so don’t miss out on any opportunities when it comes to your tax return. Take the time to read the information below, and if you’re not sure, you can register to send us a message regarding your tax submission. Otherwise, make a note on your online tax return when you’re filling it out, and we’ll check your query before lodgement.
Motor Vehicle Log Book
Ensure that you have kept an accurate, and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on, or before 30th June 2014.
You should make a record of your odometer reading as of 30th June 2014, and keep all receipts/invoices for your motor vehicle expenses. Once prepared, a log book can be used for a 5 year period should the nature of the travel, type of vehicle, and business use percentage not alter.
Prepay Expenses and Interest
Expenses relating to investment activities can be prepaid before 30th June 2014. You can prepay up to 12 months of interest before 30th June 2014 on a loan for a property or share investment, and claim a tax deduction for this financial year.
Other expenses in relation to your investments can be prepaid before 30th June, including rental property repairs, memberships, subscriptions, and journals.
Possibly your greatest financial asset is your ability to earn an income. Income protection insurance replaces up to 75% of your salary if you are unable to work due to sickness or an accident. The insurance premium is generally tax deductible, plus you get the benefit of protecting your family’s lifestyle if you cannot work due to sickness or an accident. It’s a small price to pay for peace of mind. Similar to rental property interest, income protection premiums can also be pre-paid for 12 months to increase your deductions.
Work Related Expenses
Don’t forget to keep any receipts for work-related expenses such as uniforms, training courses and learning materials, as these may be deductible for tax purposes.
Sacrifice Your Salary to Super
If your marginal tax rate is 19% or more, salary sacrifice can be a great way to boost your superannuation, and pay less tax. By putting pre-tax salary into super rather than having it taxed as normal income, you may save tax. This can be especially beneficial for employees nearing their retirement age.
Property Depreciation Report
If you have an investment property, a Property Depreciation Report (prepared by a Quantity Surveyor) will allow you to claim depreciation, and capital works deductions on capital items within the property. The cost of this report is generally recouped several times over by the tax savings in the first year of property ownership.
Ownership of Investments
A longer term tax planning strategy can be reviewing the ownership of your investments. Any change of ownership needs to be carefully planned in relation to any capital gains tax, and stamp duty implications.
Investments may be owned by a Family Trust, which has the key advantage of providing flexibility in distributing income on an annual basis, and the ability for up to $416 per year to be distributed to children or grandchildren tax-free.
Realise Capital Losses
Tax is normally payable on any capital gains. You should consider selling any non-performing investments you hold before 30th June 2014 to crystallise a capital loss, and reduce, or even eliminate any potential capital gains tax liability. Unused capital losses can be carried forward to offset future capital gains.
Defer Investment Income & Capital Gains
If practical, arrange for the receipt of Investment Income (e.g. interest on term deposits), and the contract date for the sale of capital gains assets, to occur AFTER 30th June 2014. The contract date is generally the key date for working out when a sale occurred, as is the contract date of purchase for the 50% general discount of Capital Gains Tax. Remember, the sale ocurrance date is the contract date, and NOT the Settlement Date!
Qualify for a Government Co-Contribution
If your total income is less than $48,516, you may be eligible for a super co-contribution from the Federal Government. For each dollar in personal after-tax super contributions, the Government will contribute from 50 cents, up to a maximum co-contribution of $1,000 for those earning less than $33,516.
For the purposes of this test, total income is assessable income, as well as reportable fringe benefits, and reportable employer superannuation contributions, less allowable business deductions.
Net Medical Expenses Tax Offset
Review your net medical expenses, and consider prepaying net medical expenses if you are close to the $2,162 threshold (or the $5,100 threshold if your adjusted taxable income is above the applicable amount).
From 1st July 2013, those taxpayers who received the offset in their 2012–13 income tax assessment will continue to be eligible for the offset for the 2013–14 income year if they have eligible out-of-pocket medical expenses above the relevant claim threshold.
Generally, taxpayers who don’t claim the offset in this 2014 tax year will not be able to claim the offset in the 2014, or later tax years. Should the offset claim be for disability aids, attendant care, or aged care, you are not restricted to having made a claim in the 2012-2013 year.
Register Now with Refund Express to Maximise your Tax Refund this year
If you’re not sure when filling out your online tax return on where to claim some of the above, we also have a comments section at the end of the tax return process, where you can ask or add in any extra requirements we can help with. Maximise your tax refund this year with Refund Express and our Online Tax Return.Start Now!
Information contained in this document 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 or the Australia Tax Office’s views. We recommend that you obtain investment and taxation advice specific to your taxation, financial situation and particular needs before making any decision or acting on any of the information contained in this document. Subject to law, Refund Express Australia nor their directors or employees or authorised representatives:
gives any representation or warranty as to the reliability, accuracy or completeness of the information; or
accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this document.