Smart end of financial year strategies

The end of the tax year is edging closer.  If you haven't planned how you will maximise your income and save some tax, take note! The most effective strategies are often the simplest and can be applied before 30 June this year, whilst others should be considered for next year.

Some general tax strategies are outlined below:

Before the end of this financial year, perhaps you should review your investment portfolio to determine whether investments should be sold to offset any capital gains or losses made throughout the year. By doing this, you will also be able to ensure that you get any available capital gains concessions by holding assets for more than 12 months.

Is there any non-essential income you could defer to the new financial year? This could include arranging a fixed deposit or other income so that the income from the investment is paid after the end of this tax period.

What about bringing forward expenses that won't accrue until the next tax year, by paying them this tax year.  This option is most often achieved by paying loan interest in advance.

Also look at maximising tax deductions through super contributions – can you salary sacrifice some of your income into super?  This has the added advantage of building a valuable asset and an income for your retirement.  In addition, don't forget the tax benefits for making a contribution toward a superannuation fund in your spouse's name.

 

Another method commonly used is gearing.  This allows you to borrow funds to increase your asset base and obtain tax relief on the costs of doing so. 

 

Looking forward to next year – make sure you hold assets in the most appropriate tax structure. Remember, individuals, companies, trusts and super funds are all taxed differently on their capital gains and income.

 

Use franking credits to reduce tax on lower taxed entities like super funds and lower income earners. Remember that excess franking credits are refundable.

 

And finally, income split where possible to take advantage of the progressive tax system.
These strategies are in no way exhaustive.  It all depends upon your personal situation and needs, but one thing that's common to everyone is the longer you leave these plans, the less benefit you receive. 

 

Please note this information is of a general nature only and does not take into account your individual circumstances or needs. If you would like to know more information on any of the above strategies make an appointment with your adviser today.

 

Remember, only a registered tax agent can give you overall tax advice – your adviser’s office can recommend someone if you don’t already have one.

If you require further information on lodging your tax return this year refer to the Australian Taxation office website (www.ato.gov.au).