Tax planning should be done on a regular basis throughout the year, but if you’ve been busy here are some tips to get your 2019 tax savings in order!
Imagine What You Could Do With the Tax That’s Saved!
- Reduce your home loan
- Go on a holiday
- Upgrade your car
- Top up your Super
- Make a deposit for an investment property
- Invest in new passive income assets
MOTOR VEHICLE LOG BOOK
It’s easy work to claim for your Log Book, but only if you’ve ensured that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. And that starting date for that 12-week period must be on or before the 30th of June 2019.
To keep on top of your records you should take down your odometer reading as at the 30th of June 2019 and keep all receipts/invoices for motor vehicle expenses tucked away.
Another alternative (with no log book needed) is to simply claim up to 5,000 business kilometers (based on a reasonable estimate of travel for the financial year) 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 you’re not reimbursed by your employer, you can claim this as a deduction in this years tax!
You can purchase these items at any time, but be aware that you should buy these items before the 30th of June 2019.
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 the 30th of June 2019.
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 Savings by Tax Planning
INVESTMENT PROPERTY DEPRECIATION
If you own a rental property and haven’t already done this, it’s a good idea to arrange for the preparation of a Property Depreciation Report. This is to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property possible. So nothing is missed!
Save on Tax this year with this SUPER strategy!
A DEDUCTION FOR EVERYONE!
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 2019 contribution cap, it must be received by the fund by the 30th of June 2019.
MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS
The concessional superannuation cap for 2019 is $25,000 for people of all ages, so it’s a good idea to not go over this limit or you’ll pay more tax! The non-concessional contributions cap for the 2018/19 has been reduced to $100,000. Individuals with a 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 2018/2019 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 the 1st of July 2019, 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 2018/2019 tax year is $1.6 million and will be indexed by CPI, rounded down to the 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!