Bad timing in June can ruin your July

ANTHONY KEANE

MONEY mistakes made in the next month can potentially cost you plenty at tax time.

While July is still a month away, taxpayers should be aware of the errors in June that can create financial pain– particularly around the timing of tax-deductible payments and selling assets.

Deakin University Business School associate professor Adrian Raftery said delaying tax-deductible expenses and failing to keep records were two common errors.

He said many retailers were savvy in June and promoted tax deductions as part of their endof-financial-year sales.

“However, don’t go out and buy something purely for a tax deduction,” Dr Raftery said. A tax deduction only gives you back your marginal tax rate, not the entire expense.

Individuals buying items for work or investment properties should also be aware that anything costing more than $300 could not be claimed instantly and would have to be written off over time, Dr Raftery said. Business owners get a much more generous $20,000 limit per item for immediate tax write-offs.

Peter Bembrick, a tax partner at HLB Mann Judd Sydney, said the timing of capital gains tax events, such as selling property or shares, was open to errors.

“If you incur a capital gain this financial year and a capital loss next year, you have done it the wrong way around. Ideally you want a loss that offsets the gain,” he said.

For CGT purposes, property sales are based on the date of the contract, not the settlement date – which may be in the new financial year – so plan carefully.

“It’s something that people don’t always understand,” Mr Bembrick said.

Superannuation limits also need to be monitored during June, particularly for personal tax-deductible contributions made by business owners. Mr Bembrick said if people’s payments went over the contributions caps, it could be “messy and costly” to fix.