Maximise your income
The end of the tax year is edging closer.
If you have not planned how you will maximise your income and save some tax, take note.
The most effective strategies are often the simplest and can be applied before June 30 this year, while others should be considered for next financial year.
Before June 30
• Defer non-essential income until the new financial year. • Review your investment portfolio prior to June 30 to determine whether investments should be sold to offset any capital gains or losses made throughout the year. • Ensure you are eligible for capital gains tax concessions by holding assets for more than 12 months. • Maximise tax deductions through super contributions. Alternatively, make a contribution into super for your spouse – this could provide you with a tax offset. • Major changes to super come into effect from July 1, 2017. Make the most of the current contribution caps before they are lost. • Pay next year’s interest on investment property, margin loans, or protected equity loans and claim the deduction this year. • Ensure you review income distributions from family trusts. You can lose franking credits in some circumstances if a family trust election is not made.
Next year
• Adjust your concessional superannuation contributions. The annual limit for these types of tax-deductible contributions in 2016-17 is $30,000 for those aged under 49; and $35,000 a year for people aged 49 and over. From July 1, a cap of $25,000 a year applies, regardless of age. • Make sure you hold assets in the most appropriate tax structure. Individuals, companies, trusts and super funds are all taxed differently on their capital gains and income. • Use franking credits to reduce tax on lower taxed entities like super funds and lower income earners. Remember that excess franking credits are refundable.
• Income split wherever possible to take advantage of the progressive tax system.
In an ever-changing and complex world, seeking professional advice can help you through the maze.
We invite you to contact us to explore your individual tax planning opportunities further, but please do not leave it until the last minute. – Robert Goudie, authorised representative of Meritum Financial Group.