Tax planning should be done on a regular basis throughout the year, but if you’ve been busy here’s some tips to get your 2018 tax savings in order.
Imagine what you could do with tax saved?
- Reduce your home loan
- Have a holiday
- Upgrade your car
- Top up your Super
- Deposit for an investment property
- Invest in new passive income assets
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 30 June 2018. You should make a record of your odometer reading as at 30 June 2018, and keep all receipts/invoices for motor vehicle expenses.
An alternative (with no log book needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.
TOOLS OF TRADE / FBT EXEMPT ITEMS
The purchase of Tools of Trade and other FBT exempt items for Employees can be an effective way to buy equipment with a tax benefit.
Items that can be packaged include Handheld/Portable Tools of Trade, Computer Software, Notebook Computers, Personal Electronic Organisers, Digital Cameras, Briefcases, Protective Clothing, and Mobile Phones.
If not reimbursed by your employer you can claim this as a deduction in this years tax!!
You should buy these items before 30 June 2018.
DEFER INVESTMENT INCOME & CAPITAL GAINS
If possible, 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 30 June 2018.
The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date!
End of Year adjustments to make saving by tax planning
INVESTMENT PROPERTY DEPRECIATION
If you own a rental property and haven’t already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.
Save on Tax this year with this SUPER strategy!
A DEDUCTION FOR ANYONE
Personal Superannuation Contributions Deductions for personal superannuation contributions are now allowed for all individuals under the age of 75 (including those aged 65 to 74 who meet the work test). Previously, a deduction was only available to individuals whose employment income was less than 10% of their total income.
For the contribution to be counted towards the employee’s 2018 contribution cap, it must be received by the fund by 30 June 2018.
MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS
The concessional superannuation cap for 2018 is $25,000 for people of all ages. Do not go over this limit or you will pay more tax! The non-concessional contributions cap for the 2017/18 has been reduced to $100,000. Individuals with total superannuation balance of more than $1.6 million are not eligible to make non-concessional contributions.
The full co-contribution rate applies for income up to $36,813 and the partial co-contribution applies for income up to $51,813 for the 2018/18 tax year.
Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge.
FOR THOSE IN TRANSITION
From 1 July 2018, the earnings of a transition to retirement pension will be taxed at up to 15%, the same as they are in a super accumulation account. The earnings of ordinary retirement pensions are still tax free.
The transfer balance cap was introduced on how much super can be transferred to a tax-free account based pension. Excess transfer balance tax is payable for exceeding the cap. The transfer balance cap for the 2018/18 tax year is $1.6 million and will be indexed by CPI, rounded down to nearest $100,000.
LOW INCOME EARNERS
The spouse contributions tax offset will be available for individuals contributing to the superannuation account of a spouse whose income is up to $37,000. This will reduce up to when the spouse’s income reaches $40,000.
The low income superannuation contribution scheme has been replaced by the low income superannuation tax offset. Individuals with an adjusted taxable income up to $37,000 will receive a refund into their superannuation account of the tax paid on their concessional superannuation contributions, to a cap of $500.
HIGH INCOME EARNERS
The maximum super contributions base for high income earners is $211,040 per annum for the 2018/18 tax year. High income earners become liable to pay Division 293 tax when their income for surcharge purposes reaches $250,000 (previously $300,000).
Save Tax by using what you already have and need.