It is never too late to consider simple tax effective strategies that may assist you to save money and grow your wealth. Here are some of our favourites.
1. Start or increase your deductible super contributions.
Concessional contributions to super include your employer’s compulsory contributions, salary sacrifice contributions or personal tax-deductible contributions if you’re eligible. For most Australians earning under $300,000pa, these contributions attract a tax rate of 15% (instead of your marginal tax rate) so consider making additional contributions to boost your superannuation balance while reducing your tax bill. Note there are limits as to how much you can contribute each financial year so contact us for an assessment of your current situation.
2. Seek a government co-contribution to your super.
If your total income is $34,488pa or less and you have made at least $1,000 in after-tax contributions to super, the government could top up your super by another $500. In fact, those earning up to $49,488 can take advantage of this scheme however the amount decreases as income rises over the base of $34,488. Other eligibility conditions apply so contact us to see if this scheme is suitable for you.
3. Check your Low Income Super Contribution eligibility.
Anyone earning $37,000pa or less may be eligible for the Low Income Super Contribution (LISC) of up to $500. The amount automatically added to your super account is 15% or the amount of your concessional contributions (including super guarantee and salary sacrifice or personal tax deductible contributions if eligible) up to a maximum amount. This is designed to help those on low incomes boost their super.
4. Contribute to your spouse’s super.
If you are married, your spouse is under the age of 65 (or is aged 65-69 and satisfies a work test), and earns $10,800pa or less, the first $3,000 you contribute to their super fund could receive an 18% tax offset. This offset reduces to zero once their income hits $13,800pa. This could result in you receiving a tax offset of up to $540 while your spouse’s super balance gets a boost. This is a great option if your spouse has take time off from their career to meet study or carer obligations.
5. Keep all of your investment and work-related expenses together in one easy-access location.
Costs relating to producing investment or work income, whether they be related to accounting, advice, management fees, interest payments on loans, repair costs, uniforms, dry cleaning, motor vehicles, etc., may be tax deductible so it pays to have everything together ready for your accountant come tax time. There’s no better time to start being organised like the present and, with any number of free applications available to help you store and manage documents such as Evernote and Google Docs, there’s no excuse for not having everything in order.
6. Pre-pay investment loans’ interest and income protection insurance premiums 12 months in advance.
Interest charges on investment loans and income protection insurance premiums are generally tax deductible so, by paying these amounts in advance, you may be able to reduce your taxable income.
Recent changes to pension eligibility criteria mean that you will need to save more than ever to enjoy a comfortable lifestyle when you retire. By getting organised and implementing a few smart strategies now, you can minimise your tax and improve your financial well-being. Remember there may be other strategies which could be beneficial to you so feel free to contact us for personalised advice.
Note: The information provided is general advice only as we have not taken into consideration your personal circumstances. Before implementing any of the above strategies we recommend you seek professional advice which can be tailored to your needs and circumstances.