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With 30 June 2018 rapidly approaching, now is the time to review your financial position and consider any tax or super strategies that could boost your retirement savings, maximise Government entitlements, avoid potential penalties and ultimately, reduce your tax payable.
Make a contribution to your super
Before 1 July, you may want to consider taking advantage of concessional (pre-tax) or non-concessional (after-tax) contributions. The current concessional contributions cap is $25,000 and the current non-concessional contributions cap is $100,000. It is important to note that individuals with a balance of or in excess of $1.6m are not eligible to make non-concessional contributions.
Alternatively, you may want to consider downsizing contributions (if eligible) which could enable you to make a contribution of up to $300,000, outside the usual non-concessional contributions cap (not available until 1 July 2018).
Consider taking advantage of the First Home Super Saver Scheme
The First Home Super Saver Scheme (FHSSS) enables first home buyers to access their tax-exempt voluntary superannuation contributions from 1 July 2018, and the rate of deemed earnings (made from 1 July 2017). If you have been making additional contributions to superannuation since 1 July 2017, you may be eligible to withdraw those funds under the FHSSS from 1 July 2018. If you haven’t been making additional contributions, you may want to consider taking advantage before 30 June 2018. We strongly recommend seeking financial advice prior to making additional contributions into superannuation to ensure the FHSSS is right for you.
Draw your minimum pension
If you are in pension phase, have you drawn your minimum pension? If you fail to do so before 30 June 2018, the pension account will cease and all assets supporting the pension will be deemed not to be in retirement phase for the entire financial year. As a result, your fund will lose its tax exemption on investment earnings.
Review your salary sacrifice arrangements
Since 1 July 2017, all individuals under the age of 75 are eligible to claim tax deductions for personal super contributions, subject to the concessional cap, and taking account of previously-made super contributions for a financial year. For example, if your employer contributed $10,000 into your Superannuation Fund via Superannuation Guarantee contributions, you are now able to ‘top-up’ another $15,000 (up to the $25,000 limit) into your Superannuation Fund and claim a deduction in your personal tax return.
Pre-pay your income protection premiums
If you have income protection insurance, you could claim your premiums as a tax deduction. If you choose to pre-pay your premiums for the next 12 months, you can bring forward a tax deduction from next year to the current year, potentially reducing your taxable income this financial year.
If your business turnover is under $10m, you may now have access to some small business entity concessions
In 2016, the Government announced an increase to the small business entity turnover threshold from $2m to $10m. Businesses with a turnover of less than $10m will now be able to access a range of concessions which were previously only available to business entities with a turnover of less than $2m. The current $2m turnover threshold will be retained for access to the small business capital gains tax concessions.
Thinking of buying a new asset? The $20,000 immediate asset write-off for small business entities has been extended to 30 June 2018
Small businesses with an aggregate annual turnover of less than $10m are able to immediately deduct the cost of each and every depreciating asset that they purchase for less than $20,000. In order to access the deduction, the asset must be purchased, installed and ready for use before 30 June 2018. An immediate deduction can be claimed to the extent to which the asset is used for income earning activities (i.e. business purposes).
All assets (including new and second hand) are eligible, except for a small number of exclusions. There is no limit on the number of eligible assets costing less than $20,000 that you can immediately deduct.
Small business tax cuts
The company tax rate has been reduced from 28.5% to 27.5%. This lower rate will now apply to small businesses with an annual aggregated turnover of less than $25m that are companies, corporate unit trusts or public trading trusts. The company tax rate will remain at 30% for all other companies that are not small business entities.
Be aware of fringe benefits tax (FBT) exemptions
Be aware that there are a number of work-related items that are exempt from fringe benefits tax (FBT) including portable electronic devices, computer software, protective clothing, briefcases and tools of trade.
If you would like more information on any of the above strategies, please get in touch with us before 30 June to allow enough time for us to assess your situation and implement any strategies that may be of benefit to you.
Disclaimer: This article contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice.