Tax Tips

Tax Tips To Review Before 30 June 2024

With the 30^th of June rapidly approaching, here are a few tax tips you might be interested in, as it’s important to ensure you have our house in order.

When focusing on personal tax planning, there are a number of areas you need to address, with the first step being to assess your situation this financial year.

Your Situation

It is important to undertake a quick assessment of the financial year by assessing your income for the year, any bonuses that have been paid, training or educational costs that may be tax deductible, and how much your employer has contributed to super as SG contributions. In relation to your personal investments what is the level of income you expecting from investments such as property or shares, how much interest have you paid on investment loans, are there depreciation allowances on your investment property, and have you sold any assets and if so at a gain or loss this financial year?

Having this information on hand will allow us to make a quick assessment on your approximate tax position and quick ways that you can reduce tax before year end using some of these strategies below.

Concessional Contributions to Cap & The Carry Forward

Concessional contributions are contributions made to your superannuation fund before tax. These include employer contributions, salary sacrifice contributions and personal deductible contributions. The annual cap for concessional contributions is currently $27,500 (in the 2023-24 financial year) and will increase to $30,000 in the 2024-25 financial year.

Making a personal deductible contribution prior to the 30^th of June 2024 up to this Concessional Contribution cap can reduce taxable income and provide you with a tax saving.

If you have received a larger income or bonus this year, or have sold an asset with a large gain, you may be able to utilise the Concessional Contribution Carry Forward rule, introduced on 1 July 2018, which allows individuals to carry forward any unused portion of their concessional contributions cap for up to five years.

If you are eligible this strategy can help you reduce assessable income or capital gains this financial year.

Prepayments – IP & Interest

Another strategy to reduce taxable income is by pre-paying your Income Protection premiums or investment loan interest (if the lender permits) before the 30^th of June.

Income Protection cover that is used to protect your income in case of your illness or disability is a great tool to protect your personal financial livelihood. However, it can also be a tax tool if funded personally as the premiums are generally tax deductible. By pre-paying the annual premium you can not only secure the protection, but also gain a tax deduction this financial year.

Some investment loans also allow investors to pre-pay the interest for the year thereby generating a tax -deduction prior to the end of financial year. This strategy is beneficial from a tax perspective, however, if the loan is on a variable rate you may be paying more interest as the expectation is that interest rates will be on the way down next calendar year.

Personal Excess Cash – NCC’s

If you have excess cash sitting in your personal account and generating interest this income may be taxable depending on you other income levels. It can be highly advantageous to make a personal non-deductible or Non-Concessional contribution to super of these amount to the Non-Concessional cap ($110,000 this financial year) as the interest generated after this point would be taxed at 15% in superannuation compared to up to 45% at the highest marginal tax rate.

New Asset Purchases

There are a number of ways that new asset purchases can be made for higher income earners to ensure funds are tax-effective and protected. We have a full discussion on this topic on the Unlock Your Business Podcast, which now also records episodes on YouTube. The link for this episode is https://youtu.be/lTCxY1R2a4w

Interested in knowing more?

Important Disclaimer: The information provided in this article is general in nature and does not constitute financial advice. Please consult with a qualified financial advisor to discuss your individual circumstances.