Taxation Tips

Any time is a good time to ensure you have taken advantage of the taxation opportunities available to you.  Some tips and strategies you may consider to help minimize tax and maximize your savings.

Are you self-employed or want to top-up your superannuation?  You may be able to claim a tax deduction for up to $25,000 of personal superannuation contributions.

If you are eligible, claiming a tax deduction for your personal superannuation contributions can reduce your tax payable.

Are you an employee of your own company?  Consider paying profits as tax-deductible employer contributions.

Using profits to pay an employer superannuation contribution instead of salary or dividend payments may provide a tax saving up to 30%.  Employer contributions are taxed at only 15% in the fund, instead of paying tax up to 47% on other options.  If using this strategy, ensure that the contribution limit of $25,000 per annum is not exceeded.

 Are you retired, a homemaker or unemployed (and under age 65)?

Consider making a deductible superannuation contribution to manage tax payable, particularly if large capital gains are anticipated.  If you are in one of these situations, you could be eligible to claim a tax deduction on your personal superannuation contributions. This can help to offset tax on other income, such as an assessable capital gain that you have realised this year. You should check whether you are eligible to claim a tax deduction and work with your tax adviser to determine how much to claim as a deduction, including consideration of contribution limits.

Will your income be less than $52,697 this financial year?

Make a personal after-tax contribution (up to $1,000) and get a 50% return if eligible for the Government co-contribution.  If you are eligible for a co-contribution this is the most effective way to contribute to superannuation as it provides an effective return of up to 50% on your eligible contributions.  For each eligible $1.00 you contribute, the government will pay a co-contribution of $0.50, up to a maximum co-contribution of $500.  You should check with your financial adviser to see how much co-contribution you can be eligible to receive and how much you need to contribute.

Planning for the financial year ahead

Your opportunities are greater if you consider tax planning throughout the year, not just at year end.  Some ideas that may work for you include:
  • Hold investments in the name of the person with the lowest taxable income.
  • Review your salary package for any tax effective options.
  • Set up a salary sacrifice arrangement with your employer to contribute to super to boost your retirement savings and reduce tax.
  • Make a tax deductible donation to charity.
  • Hold insurance cover inside your superannuation fund to reduce the effective cost of premiums through tax concessions.
  • Gear into growth investments if you can tolerate higher risk and have a long investment timeframe.

Before implementing any of these ideas or strategies, it is important that you seek financial planning and taxation advice for your situation.  Contact Plan Your Future today.