INDIVIDUALS

To help you with you tax planning, we have included a list of possible opportunities below, that you could take advantage of for your EOFY tax return.

1. Personal Super Contributions

From 1 July 2017, an individual is able to make a personal deductible superannuation contribution regardless of whether they are self-employed or not.

Individuals at a lower tax rate should check what contributions they can make before claiming a deduction. You can review your superannuation accounts to see your employer contributions to date.

Reminder: The concessional contributions cap is $25,000 for the 2017/18 financial year. Please don’t exceed that limit, otherwise you may have to pay more tax.

Additionally, individuals earning over $250,000 in taxable income need to be aware that Division 293 tax will apply to concessional superannuation contributions. If you’re not sure what this is, speak to your accountant. They will be able to help explain it for you.

2. Capital Gains

Where appropriate, consider realising capital losses by the year’s end. This will enable you to offset them against realised capital gains of that year. This will help you to reduce the tax on any large capital gains incurred during the year.

3. Deductible Donations

Did you know? If you have made any donations throughout the year, you could be eligible for a deduction. Donations or gifts of $2 or more to a deductible gift recipient (DGR) can be deducted as part of your tax return.

Keep in mind that some schools and churches do not have DGR status. This means that you can not claim donations made to these organisation. You can check whether an entity has DGR status, by searching them on the ABR website. Ensure that they are “endorsed”.

A deduction is also allowed for gifts of publicly-listed shares that have been held for at least 12 months and which are valued at $5,000 or less.

Where spouses are on different marginal rates, consider ensuring that all deductible gifts are made by the spouse in the higher tax bracket so as to maximise the benefit of the deduction.

4. Prepayments

Subject to cash flow considerations, consider making deductible purchases by year’s end in order to accelerate deductions. This applies particularly if the income in the following year is expected to be lower than in the current year.

In certain circumstances, an immediate deduction can be available for prepaid expenditure (eg interest on a loan relating to a rental property).

5. Spouse Superannuation Contribution Rebate

A $540 tax offset is available for after-tax contributions (up to $3,000) to a complying superannuation fund on behalf of a spouse (married or de facto), where the spouse’s annual taxable income is less than $37,000.

A reduction of the maximum offset is available where spouse’s income is between $37,000 and $40,000.

6. Superannuation Government Co-contribution

For low income earners, subject to certain conditions, the government will make a co-contribution of up to $500 if a taxpayer makes after-tax contributions of at least $1,000.

The co-contribution begins to phase-out at a taxable income of $36,813, and is not available for taxable income above $51,813.

You can also take advantage by increasing the amount that can be withdrawn under the First Home Super Saver Scheme. However, the co-contribution itself would not be included.

7. Proposed Changes to HELP Repayments

The MYEFO report from December 2017 announced that new HELP repayments level may exist from 1 July 2018. As a result, students with a HELP debt may need to start repaying the debt on earning $45,000.

Delaying some deductions where appropriate may remove the repayment in the next financial year.

8. Additional CGT Discount For Investors

An additional CGT discount of up to 10% is now available for investors who invest in affordable housing from 1 January 2018. Conditions apply to get the additional discount, including holding the asset in affordable housing for three years.

DO YOU HAVE A BUSINESS?

If yes, here are some additional tax planning opportunities that you could take advantage of before the EOFY:

1. Extension of Instant Asset Write-off

It was recently announced that the instant asset write-off for small businesses will be extended 12 months to 30 June 2019.

Entities with an aggregated annual turnover of less than $10m will be able to immediately write-off an asset costing less than $20,000. The change in the end date of 12 months reduces a potential cash-flow issue for small businesses.

2. Trust Distributions

Trust tax planning should be undertaken as soon as possible. The resolution appointing or distributing income to beneficiaries needs to be made on or before 30 June 2018, or earlier if required by the trust deed.

If you have considered these areas and are ready to come in for your end of year tax appointment, please book you appointment with your accountant as soon as possible – (03) 9762 7344.

OUR BEST ADVICE

As we all know – “The Early Bird Gets the Worm.” So, get in early, even if it’s just to secure date!

You don’t need to have everything ready as soon as you book. You can instead, use the time leading up to your appointment to prepare any relevant documentation that you will need.

If you have any questions, we’d be more than happy to answer them via phone (03) 9762 7344 or email at mail@knoxtax.com.au.

Otherwise, happy end of financial year!