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<\/a>June 30 is rapidly approaching, which means there are things you should do in the near future to improve your financial situation.<\/p>\nSmart tax planning means deferring income while bringing forward expenses. For example, if you have money to spare, think about placing it in a term deposit with the interest maturing after June 30. The interest will then be taxed next year.<\/p>\n
If you have deductible expenses, such as repairs and maintenance on investment properties, try to bring them forward so you can enjoy your tax deduction in the current financial year.<\/p>\n
Investigate prepaying 12 months\u2019 interest on your investment loans. Pre-paying a year\u2019s interest on a loan of $300,000 may cost $15,000, but it could get you up to $7350 back as a tax refund. This strategy requires negotiation with your lender \u2013 you can\u2019t just bank the equivalent of a year\u2019s interest into the loan account, because all the lender will do is take one month’s interest and credit the rest to the principal<\/p>\n
An especially valuable strategy, which was only introduced last July, is the ability to make tax-deductible concessional contributions to your superannuation account, even if your employer is paying superannuation for you. The cap is $25,000 a year, and this includes the employer contribution. For example, if your employer is paying $9000 into super for you, your maximum contribution will be $16,000. It’s important to get the paperwork right with this one, so take advice before you make the contribution.<\/p>\n
Do you want to make a guaranteed 50 per cent on your money between now and June 30? Then talk to your financial adviser about making a non-concessional contribution of $1000 to superannuation. Provided you meet the eligibility guidelines, the government will give you a tax-free bonus of $500, which will see your $1000 become $1500.<\/p>\n
The maximum government co-contribution is $1 for every $2 of eligible personal super contributions made in a financial year and it is subject to an income test. It starts to taper at $36,813 a year, until it cuts out at $51,813 a year. For co-contribution purposes you must be under 71 at the end of the financial year.<\/p>\n
Just be aware the employer compulsory superannuation does not count for the co-contribution. To be eligible, you must make an additional contribution from after-tax dollars. This is not subject to the 15 per cent entry tax.<\/p>\n
Another simple and useful strategy, if one spouse will have low earnings, is to make a spouse contribution of $3000, so you can become eligible for the tax offset \u2013 it is the best way I know to get a capital-guaranteed 18 per cent on your money.<\/p>\n
The amount of the offset is 18 per cent of the spouse contribution you actually make, up to a maximum of $3000, which gives you an immediate tax offset of $540, reducing your own tax. Spouse income must be under $37,000 to get the full offset, then it gradually reduces, reaching zero when the spouse\u2019s income reaches $40,000.<\/p>\n
Just keep in mind that contributions to super must be received by the fund prior to June 30. This year it falls on a Saturday, which means the effect of the last working day is Friday June 29.<\/p>\n
Last but not least, there is one thing you should\u00a0not<\/em>\u00a0do \u2013 that is sign a contract to sell your house, if you are thinking of taking advantage of the new government downsizing laws. I’ll discuss those in detail in a future article, but bear in mind the contract must be signed\u00a0after<\/em>\u00a0June 30, otherwise you will be ineligible.<\/p>\n \n