End of Financial Year Strategy Reminders

30 June is around the corner, so here are a few useful strategies for the end of financial year:

Top up your super

Personal deductible contributions count towards your concessional cap (which is $30,000 this year and includes your employer contributions and any salary sacrifice amounts).  A contribution may not only boost your super, but also potentially allow you to claim a tax deduction. Claiming deductions on these contributions can be advantageous if you received any extra income during the financial year, which would otherwise be taxed as personal income. Remember to complete a ‘Notice of Intent’ form for your fund's acknowledgment, and make sure your fund receives the money before the end of financial year (we suggest contributing no later than 23 June).  Remember, limits apply on contributions, and you may incur additional tax and penalties if you go over the caps.

Top up your partner’s super

Sending some super your partner’s way has benefits for both of you! If your partner’s annual income is less than $37,000 and you contribute a minimum of $3,000, you can claim the maximum $540 tax offset. 

If your partner’s income is below $45,500 or up to $60,400 (from employment activities) and you make a personal contribution for $1,000 they may be eligible for the government co-contribution of up to $500 (or a portion there of). Again remember to ensure that any contribution is made well before the 30 June.

Withdrawal and Recontribution

For retired clients, the purpose of a re-contribution strategy is to replace the taxable component of the funds being withdrawn with a tax-free component when it is recontributed back to super.  From an estate planning perspective, a withdrawal and re-contribution strategy can minimise the taxable component of any benefit paid on death. This could result in a significant tax saving where your super death benefit will be paid to a non dependant for tax purposes, (such as an adult child).  Your age and the available non concessional caps need to be considered carefully.

Retiring soon? Pause Leave Entitlements 

If you have some accrued holiday and long service leave entitlements and are planning to retire soon, taking leave after 1 July may save you in tax.  Taking all your entitlements in a single tax year will increase your total income for the year and could push you into a higher tax bracket.

Prepay Investment interest

If you have an investment loan, you can prepay up to 12 months’ interest in advance.  You may be able to claim a tax deduction for the prepayment in this financial year (subject to the relevant rules so please check with your tax adviser first), this works well for those expecting their taxable income to be lower in the next financial year.

Please ensure you check that you are eligible for any of the above strategies BEFORE taking action.

General Advice Warning - This communication has been prepared on a general advice basis only. The information has not been prepared to take into account your specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial or tax adviser before making any investment decisions.