When it comes to getting the most (money) from your annual tax return, there is always a lot to think about, so we’ve provided a short checklist of options that could open the door to some opportunities. The key here is to plan ahead.
Tax deductions—lower your liability
- Pay now for some of next year’s expenses
If you have some spare cash available, paying for certain expenses early could mean you also get your tax break back from the ATO earlier. Expenses that are met in July could leave you waiting more than 12 months for the return. A popular expense in this category is interest on an investment loan, but be careful because not all expenses qualify you for a tax deduction in advance.
- Cash back for some of your insurance premiums
Except for income protection, most life insurance premiums are not tax deductible at a personal level. But holding your death or permanent disability cover through a superannuation fund can achieve a similar outcome. This is an important consideration when setting up a new policy. Or in some cases you may be able to replace an existing policy with one inside superannuation, which is particularly helpful when cash flow is tight.
Super contributions—don’t waste the limits
June 30 is not just about deductions for expenses. It’s also a good time to consider the superannuation contribution limits that may be wasted if you don’t act soon, particularly as both concessional and non-concessional limits reduce significantly from 1 July 2017.
- Salary sacrifice or concessional contributions
The annual limit for these types of tax-deductible contributions in 2016/17 is $30,000 for those aged under 49; and $35,000 per year for people 49 and over. From 1 July a cap of $25,000 per annum applies, regardless of age.
If you’re an employee, this limit covers both employer super guarantee and salary sacrifice contributions. Do you need to review and adjust your current arrangements?
- After-tax contributions
Anyone under 65 (whether working or retired) can contribute $180,000 each year to super as non-concessional contributions. You can also contribute $540,000 in a single year by bringing forward the limit for the following two years. From 1 July the annual cap reduces to $100,000 or $300,000 over three years.
These are just a few ways to manage how your money is taxed. Depending on your circumstances, other options may be available. Your licensed financial adviser can work with you to help you achieve what is best for you this financial year. But please don’t leave it too late.
For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.