The end of financial year is fast approaching and you’re probably getting to the end of your checklist. But just in case you’ve left things a little late, or to double check you haven’t missed something, we’ve compiled a checklist to help ease the inevitable tax-time stress.
With the end of financial year fast approaching (one week out!), it is a great time to ensure all of your finances are in order. Taking action before June 30 can open up more opportunities for you.
If you would like to know more about the changes proposed in the 2017 Federal Budget, read our Budget Wrap here. Additionally, if you missed our EOFY Super Contributions Update, you can have a read here.
Now is the time to make any last-minute adjustments to reduce your tax bill and maximise your long-term savings.
Pay expenses, delay income
Start by looking for ways to bring forward tax-deductible expenses to the current financial year and delay income until July. This is especially the case if your taxable income is likely to be higher this year than next. Some simple financial housing tips could help you reduce your tax bill. Begin by collecting all supporting receipts and documentation for any work-related expenses. Where possible, bring forward tax-deductible expenses to the current financial year and delay income until July. This is especially worthwhile if you think your taxable income will be lower next financial year.
You may be able to pre-pay 12 months’ interest on a margin loan, or pre-pay 12 months’ premiums on income protection insurance held outside super, and claim the full deduction in this year’s return. You might consider pre-paying membership fees for professional organisations and subscriptions for work-related publications.
Instant asset write-off
If you are a small business owner with turnover below $2 million and you have been tossing up whether to invest in new equipment, get cracking. Businesses with turnover below $2 million can claim an immediate deduction for the cost of assets up to $20,000.
And if the 2017 Federal Budget is passed, from July 1 the income tax rate for small business will reduce to 27.5 per cent so it makes even more sense this year to delay income where possible.
Take Advantage of Government Contributions
If you earn less than $36,021 this financial year and make an after-tax contribution to super, then you are entitled to a government co-contribution of up to $500. The co-contribution tapers out once you earn $51,020.
Review your investment portfolio
After another volatile year on financial markets, you may be sitting on some paper losses from shares or other investments. This could be a good time to sell some of your poor performers to offset against capital gains made on the sale of other investments over the past 12 months.
Where possible, it makes sense to sell investments held for at least 12 months to qualify for the 50 percent capital gains tax discount.
Residential property has had a mixed year across the country, with the boom continuing in Sydney and Melbourne and prices falling in the West. With interest rates on investment loans on the rise, it is more important than ever to claim all allowable rental property deductions.ii
Claim rental property deductions
Whether you are a new landlord or an old hand, make sure to claim all allowable rental property deductions.
- You can claim an immediate deduction for interest on your investment loan, repair and maintenance and tenancy costs such as the preparation of a lease or eviction.
- You can also claim some expenses over a number of years, such as the cost of depreciating assets, structural improvements and borrowing costs such as stamp duty and loan fees.
We think MLC have come up with an excellent EOFY checklist of strategies to aid you in making smart decisions about your finances. It outlines 12 tax-effective strategies that you could benefit from. Have a read here.
With so much change in the air, it is more important than ever to seek professional guidance from your tax accountant and your financial adviser, so give us a call
This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the information, consider its appropriateness to your circumstances.
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