Accountants have two dates they get really excited about. The first is the Federal Budget, ‘The Night of Nights’. The second is June 30 (and not just for the end-of-year sales), so that means it’s tax planning time and here are the tax tips you need:
Superannuation co-contributions are still something you should look at
Yes, the Government has lowered the matching rate to 50% (meaning a 50% return on your money instead of 100%) and reduced the amount to $500 (from $1,000), as well as lowering the eligible income threshold. It’s still tax free money from the ATO, so why not take it? You must earn below $46,920 to start qualifying (including add-on adjustments like fringe benefits and reportable superannuation).
Up to another $500 tax-free bonus is available on (adjusted) taxable incomes of up to $37,000 to directly boost your retirement savings.
Goodbye medical expense offset!
If your medical out-of-pocket expenses exceed $2,120, then currently you can get a 20% rebate, but if you don’t claim the rebate this year (FY 2012-13), then it’s gone! If you do claim, the rebate will be extended for the next two years (if you keep claiming), so pay any costly medical bills before June 30 to remain eligible.
To determine your Medicare levy surcharge or your health fund rebate, visit the ATO website. But if you’re on an (adjusted) single income greater than $84,000 or family income greater than $168,000, then consider insurance before it’s too late!
Have you made a capital gain this year from the sale or part sale of a business, shares or property? If the answer is ‘yes’, start thinking about managing your capital gains tax liability. Start by looking for capital losses from anything you‘ve sold (or should sell) this year (before June 30), or any losses carried forward from prior years, to offset your gains.
The concessional cap payments into super have increased to $35,000 for anyone aged 60 or over on 30 June 2013 (for financial year 2013-14) and for anyone aged 50 or over on 30 June 2014 (for financial year 2014-15), so review your future salary sacrifice arrangements today!
Excess superannuation contributions
From 1 July 2013, the Government is proposing to make these refundable instead of taxing them. However, penalties remain for this financial year, so make sure you check your existing contributions before making more. And make sure contributions for this year are paid well before June 30!
Prepay your business expenses
If it’s been a great year, prepay expenses where you can and don’t be too hasty sending out your invoices prior to June 30.
Business stock takes
If you have stock, do the dreaded count on June 30.
Finally, don’t forget!
You can claim expenses for sunglasses, hats and sunscreen if you’re a taxpayer in any outdoor occupation (including driving), but only if you have a receipt (so don’t lose them!).
Dr Steven J Enticott is a senior partner of www.ciatax.com.au accountants and author of the new book How to deal with Financial Distraction, now available at good book stores and online.