With only 18 days to go until the end of the financial year there is still time to reduce your tax liability but you will have to act quickly. Here are a couple of strategies that could help to either reduce the tax you need to pay or maximise your savings:
Pre-pay your Income Protection Insurance
Did you know that if you pre-pay your income protection insurance before the end of the financial year you can claim the entire premium in this year’s tax return? It’s true, and if you need some extra deductions this year because of a higher than usual income this could be a great way of reducing your tax liability. On top of the tax deduction you will also be saving money by paying your premiums annually as insurers also offer discounts for annual premiums.
Claim a personal tax deduction for superannuation
If you are self employed or earning less than 10% of your total assessable income plus reportable fringe benefits and reportable employer superannuation contributions from employment you may be able to claim a tax deduction for all or part of your personal contributions to superannuation. This can be a great way to build your retirement savings while also reducing your taxable income. There are yearly age based limits on how much you can contribute which are $25,000 if you are 59 and under and $35,000 if you are over 60 years of age. You will also need to let your superfund know that you intend to claim a deduction before June 30 so please check with your accountant, tax agent, or financial adviser to ensure that the appropriate notice has been lodged and check if you meet all the conditions.
Spouse superannuation contributions
You may consider making a contribution to your spouses superannuation. If you do you may be entitled to a maximum tax offset of up to $540 for the financial year. There are various conditions that must be met in order to claim the deduction with the full deduction available on assessable incomes of $10,800 or less reducing to nothing at an assessable income of $13,800. This makes it a great strategy for those with a partner on a low income.
Have you heard of this one before? If you earn less than $48,516 in this financial year this is something to seriously consider as the Government is giving money away which doesn’t happen very often. I bet your dying to hear how this works . . . quite simply if you earn $33,516 or less this financial year, the government will contribute into your superannuation fund (tax free), $0.50 for every dollar that you contribute to super up to a maximum $500. So, if you contribute $1,000 into super before the end of the financial year the government will contribute $500. If you contribute $300 the government will contribute $150. That’s money for jam!!
For incomes above $33,516 the rate of contribution will decrease until it cuts out at $48,516. There is a great calculator you can use on the Money Smart website https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/super-co-contribution-calculator to determine how much co-contribution you are entitled to, give it a go.
The information provided is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from an adviser.