The coats are out of storage, it’s getting harder to get out of bed in the morning and the heaters are suddenly being turned up to full blast. It must be winter! And as an accountant, for me that means tax time! So here are seven quick to-do’s that could save you some cash before 30 June.
1. Dig out your income protection policy information
Did you know that if you have income protection insurance (outside of super) you can claim a tax deduction? Make a note of the cost of your premiums so you can add it to your tax return.
2. Donate to charity
If you’ve been thinking about donating to your favourite charity but haven’t quite gotten around to it, now is your time. Any donations you’ve made are tax deductible, as long as you have a tax receipt.
3. Buy that new work/laptop bag (yep!)
It might sound crazy, but it’s true. If you’re carrying your laptop to and from work in your bag every day you’re entitled to claim the purchase of that bag as a tax deduction. Again, make sure you keep the receipt and yes, I’m serious!
4. Check you’re claiming everything you’re entitled to
There are a number of available tax deductions that can often be missed. Check out this handy ATO guide for tax deductible work related expenses by occupation.
5. Boost your super and claim a tax deduction
If you contribute some of your after-tax income or savings into super, you may be eligible to claim a tax deduction. This means you’ll reduce your taxable income for this financial year – and potentially pay less tax. And at the same time, you’ll be boosting your super balance.
The contribution is generally taxed at up to 15% in the fund (or up to 30% if a higher income earner). Depending on your circumstances, this is potentially a lower rate than your marginal tax rate, which could be up to 47% (including the Medicare Levy) – which could save you up to 32%.
Once you’ve made the contribution to your super, you need to send a valid ‘Notice of Intent’ to your super fund, and receive an acknowledgement from them, before you complete your tax return, start a pension, or withdraw or rollover the money.
Keep in mind that personal deductible contributions count towards the concessional contribution cap, which is $25,000 for this 2017/18 financial year (which also includes all employer contributions, including Superannuation Guarantee and salary sacrifice). Penalties may apply if you exceed the cap – so it’s important that you stay within the limits.
6. Boost your spouse’s super and lower your tax
If your spouse is not working or earns a low income, you may want to consider making an after-tax contribution into their super account. This strategy could potentially benefit you both: your spouse’s super account gets a boost, and you may qualify for a tax offset of up to $540.
The income thresholds increased on 1 July 2017. So now, you may be able to get the full offset if you contribute $3,000 and your spouse earns $37,000 or less pa (including their assessable income, reportable fringe benefits and reportable employer super contributions).
A lower tax offset may be available if you contribute less than $3,000, or your spouse earns between $37,001 and $39,999 pa.
7. Manage any capital gains
When you sell an asset such as shares on an investment property you realise a capital gain or a capital loss. If you realise a gain, you’ll need to pay tax on that gain, but if you realise a loss you don’t pay tax. In addition, losses offset gains. So consider the timing of selling your assets to make sure you’re doing so in a way that is tax effective.
Another strategy for reducing your tax bill is to pre-pay deductible expenses and bring forward your tax deduction to this year, rather than next year. For example, pre-paying up to 12 months premiums on an income protection policy or interest on a fixed rate investment loan.
As always be sure to talk to your accountant or financial advisor to make sure this strategy is right for you.
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The information provided by Women with Cents is general in nature. It doesn’t take into account your objectives, personal financial situation or needs. Think of it as educational material in which to help you make more-informed decisions. We recommend you obtain financial, tax and credit advice specific to your situation before making any investments or financial decisions.
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