At this time of year, many clients ask me whether it’s too late to benefit from strategies for this financial year, and the good news is – it’s not! Prior to 30th June 2017 there are a number of things people may be able to do which may improve their financial position, and potentially reduce their tax liability.
*Get more from your salary or bonus: if you’re an employee, you may want to sacrifice your pre-tax salary or bonus into super rather than receiving it as cash, which may reduce tax by up to 34%.
*Prepay tax-deductible expenses: if you have tax-deductible expenses such as interest on your Investment Loan or Income Protection premiums, you may wish to prepay these in advance to claim your deduction upfront and reduce your taxable income this financial year.
*Use Super to manage Capital Gains Tax: if you’re self-employed and have sold an investment for a gain and will have to pay CGT, then you may be able to reduce this liability by making a tax-deductible contribution to Super.
*Get a super top-up from the Government: if you earn less than $51,020 this financial year and at least 10% of that is from employment or business, and you make an after-tax contribution of $1,000 to Super, then you may be able to qualify for a government co-contribution of up to $500 to boost your retirement savings.
*Defer asset sales: if you’re thinking of selling an investment for a gain and would be subject to CGT, you may wish to consider deferring the asset sale and therefore deferring the CGT trigger event, especially if you expect your taxable income to be lower in the near future, such as if you’re close to retirement.
*Boost your spouse’s super and save tax: if your spouse earns less than $13,800 this financial year then by making an after-tax contribution to their super, you may qualify for a tax-offset of up to $540.
Many of these strategies can be used right up until the end of the financial year, but rather than a last-minute rush, it’s better to speak to your Financial Adviser now to see if these strategies or any others can improve your unique individual position this financial year, and possibly even again next financial year.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation and rulings as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
_____________________________________________________________________Mark Plaskitt is Principal and Certified Senior Financial Adviser at MLC Advice Pennant Hills. He has worked in financial advice for over 13 years, and is a member of the Financial Planning Association.