Top tips for winning at tax time
As June 30 approaches, it’s almost time for the ‘other’ New Year, which means that instead of the champagne we’re breaking out the wealth strategies – so you can be in the best position possible in the new financial year.
With only one day left to go, it’s about time to begin the New Year’s celebrations, so grab the champagne!
Okay, so it’s not quite time for THAT New Year yet … and though it’s not quite as welcome as its December counterpart, the end of the financial year on June 30 is a critical time for all families.
For the first time in almost a decade, we don’t have a tax cut to look forward to, and with the new flood levy coming into play on July 1, many families will be facing the prospect of higher taxes next financial year. People earning between $50,000 and $100,000 a year will pay an extra 0.5 per cent, and those on $100,000 or more will be subject to a 1 per cent increase. While the purpose of the levy is sound, if you’re a family right on the lower edge of the threshold, it may have an impact on your financial situation.
That means it’s especially important to get everything under control at tax time so that you’re not paying more than you have to. So let’s go over some last-minute tips you still have time to use (if you’re quick!).
Top up your super
Now could be a good time to make a contribution to your superannuation fund. Just make sure it doesn’t push you over the contribution caps (generally $25,000 for under-50s and $50,000 for over-50s) otherwise you could be penalised. And, depending on how much you earn, you may even qualify for ‘free’ money with the government co-contribution – so it’s worth looking into!
If you can get it done before June 30, think about pre-paying any deductible expenses – including things such as: home office costs, education expenses, charitable donations, annual subscriptions, and income protection insurance premiums.
Hunt down all of your receipts and tax-related paperwork to ensure that you can claim all of the deductions you can. Remember to include any allowable education expenses for the kids as well: most people don’t claim the full education tax refund that they’re entitled to, so it’s worth looking into what you can claim and making sure you have the right paperwork to support your refund
And now it’s time for the big stuff: the things you can do over the next 12 months so that the next time the ‘other’ New Year rolls around again, you’ll be ready to take advantage of all the great financial strategies available to you at tax time.
Take advantage of the perks
If you run a business as well as being an employee and less than 10 per cent of your income comes from employment, you could be able to claim your personal super contributions as tax deductions.
If the bulk of your income does come from employment, consider investing any bonuses you receive in your super and taking salary sacrifice options to reduce your taxable income.
This next tip is useful for couples: money can be paid into one spouse’s superannuation fund by the other spouse. It allows you to reduce your taxable income while boosting their retirement funds, and if they earn less than $13,800 a year you could be eligible for a $540 tax offset.
Lose some to win some
Sometimes, selling off investments that are performing badly in order to create a capital loss is a good option, but sometimes you should hang onto good assets that are simply suffering from a short-term dip in value too! Seek investment information from your financial adviser and if they agree your investments are no longer sound, this option can bring tax benefits and allow you to reinvest the money in more profitable areas.
The Financial New Year may not be all about countdowns and champagne, but it is an important time to take a look at your finances and make decisions that will get you the best results. Get those last-minute strategies in place today, and start looking at what you can do to improve your position for next year – it’s amazing what you can achieve when you start early!
Get on the fast-track to financial success!
The next Financial Independence Bootcamp is in SYDNEY on 30 July 2011
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Tags: wealth strategies, couples money, investment information, money management
Analaura Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.
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