It’s the end of the financial year which means tax time is fast approaching. By being strategic, you can make the most of available deductions and incentives to optimise your tax position. Here are some tips to help you minimise your tax bill before the end of June!
Bring forward deductible expenses and interest payments
If you have the money on hand, you may consider bringing forward next year’s deductible expenses (such as work-related expenses) or pre-paying the interest on an investment loan. Doing this will let you bring the tax deduction forward too, potentially boosting any refund you may receive this financial year.
This strategy also applies to business owners. If you run a business, prepaying some expenses before the financial year ends can help reduce your tax liability. Consider paying for items such as rent, insurance, subscriptions, and professional memberships in advance to reduce your tax bill.
Review any capital gains
When it comes to the sale of assets such as shares or property, you could benefit from a 50 per cent discount on any capital gains so long as you hold the assets for at least 12 months before selling. And if you’re able to sell in a year when your other income is reduced, you could potentially lower your capital gains tax liability even further. However, reducing your tax liability shouldn’t be the only consideration when selling your assets, it needs to fit in with your overall investment plan too.
On the other hand, you can also use losses from previous years to your advantage. If you sold shares last year for less than you purchased them, the loss can be deducted from any capital gains you made this year.
Contribute to super
Another strategy to help lower your tax bill is to make strategic super contributions. Super contributions are a great way to lower your tax commitment and boost your retirement savings!
Concessional contributions are made into your super fund before tax. They are taxed at a rate of 15 per cent, which for most people is lower than their marginal tax rate. This is an effective way to offset your income if you have higher-than-usual earnings this financial year.
It is important to note that the concessional contributions cap is $27,500, so if you have reached this limit, you may consider voluntary non-concessional contributions. Non-concessional super contributions are any payments put into super from savings or income that you have already paid tax on. The difference is that these contributions are not taxed when they are received by your super fund. You won’t be able to claim a tax deduction for non-concessional contributions, however, they can be a great way to help lower your income.
Make charitable donations
If you are thinking about making a charitable donation, now is the time to make your impact. Donations made to registered charities can be claimed as deductions if you obtain a receipt for your donation.
If you are looking for a worthy cause to support, you can always donate to the APS Benevolent Fund, a registered charity making a difference in the lives of children with cerebral palsy. This EOFY, APS is also a Match Grant Hero for REACH Siem Reach, a charity on a mission to lift children and families living in Cambodia out of poverty through education, nutrition, and healthcare. In June, we are doubling donations to help fund life-changing poverty alleviation projects over the next financial year and beyond.
Seek personalised advice
These strategies are just some of the ways you may be able to save on tax. Your tax strategy will depend on your unique circumstances. For advice tailored to your circumstances, consider seeking qualified and professional advice.
Get in touch with the APS Tax team to learn more about preparing your financials for tax time.
Learn more about APS Tax & Accounting
Written by Richard Ferraro, Chief Financial Officer & Head of Tax
Richard is a graduate of the Australian Institute of Company Directors (GAICD) and Fellow Certified Practising Accountant (FCPA) with 3 decades of experience in Financial Accounting, Tax Compliance and Advisory. Prior to working for APS, Richard has been a Partner in a tax practice, and a Taxation Manager for large corporations such as Nissan Australia, Bendigo and Adelaide Bank, NEC Australia and Australia Post.
Richard supports his clients across a wide range of services including tax compliance and advisory services to clients who are Companies, Trusts, Partnerships, Self Managed Super Funds, When Richard isn’t working he enjoys spending time with family and friends. watching the mighty Magpies, and anything to do with cars from F1 to supercars and collectables.