As June 30 approaches yet again, there are a number of things that you can do to take advantage of time and boost your financial situation. While there are some great opportunities for getting a bargain at the shops, there are also a number of ways you can reduce your tax and give your superannuation balance a top up.
If you’ve been holding out and saving for a big-ticket item like a new car, electronics or furniture, end of financial year is a great time to think about making the purchase. Lots of retailers will have some form of EOFY sale so it’s worth doing some research to see if you can catch a great deal.
It’s important though not to get too caught up in the idea of a good deal. In your research, make sure you read the fine print on 0% finance deals and what the total repayments will be. Don’t let the idea of a bargain impact your budget or longer-term saving goals; how much are you actually saving and is the item really necessary?
Now is a great time to consider your options for maximising your tax return and making the most of tax efficiencies.
If you haven’t already this year, making a donation to a charity can help your refund grow, or can be used to offset your debt. It’s a nice bonus for a good deed.
Now is also time to compile the receipts of items you’ve bought for work purposes, or if there is something you need for work, to think about making the purchase. Take note of any work related travel you may have had. If you’re not sure what items you are able to claim back on tax and how much, visit the ATO website.
In it’s budget announcement in May 2018, the Government extended the instant asset write-off scheme for items costing less than $20,000 until June 30 2019 (rather than 2018) so you have this year and next to take advantage of this. The asset must be ready for use by 30 June 2019, so if you are pre-ordering plan ahead.
Making personal contributions into your superannuation can also help to minimise the amount of tax you pay, but it’s important to be aware of set limitations.
As of July 1st 2017, employees are able to claim a tax deduction for personal super contributions. If you make a personal super contribution before the end of the financial year, this contribution will only be taxed up to 15% and provides similar benefit as salary sacrifice contributions.
You can claim a personal tax deduction for the amount of the contribution in your tax return which will reduce your taxable income for the year. If you do so, you must give a notice to the Trustee of your super fund and have it acknowledged.
This option is available to employees aged between 18 and 75. If you are over 65, you will need to satisfy the work test requirements to qualify.
Personal contributions claimed as a deduction will count towards the $25,000 concessional contribution cap.
If you have earned less than $51,813 in the 2017/18 financial year and make a personal super contribution after-tax, you may be eligible for a government co-contribution of up to $500.
You must be aged under 71, have a super balance of less than $1.6million at the start of the financial year, make the after-tax contribution of at least $1,000 before June 30 2018, and lodge an income tax return for the financial year. The amount you’re entitled to is determined by the information in your tax return.
If you earn less than $40,000 in a financial year, your spouse or partner can make an after-tax super contribution of up to $3,000 on your behalf. To claim the full tax offset of $540 you must earn less than $37,000 in the financial year.
To be eligible, the receiving spouse must be under 65, or between 65 and 69 and pass the work test. Both partners must be Australian residents.
The First Home Super Saver Scheme was introduced by the government starting 1 July 2017 in an effort to help young Australians save for their first home.
Voluntary contributions made since July 1 2017, plus their associated investment earnings, can be accessed from July 1 2018 to use for a first home deposit. Regardless of whether you’re contributing to super before or after tax, contributions are capped at $15,000 per year, or $30,000 in total.
As of July 1 2018, you can also take advantage of new legislation allowing over 65s to make a sizeable contribution to your super from the sale of your home. For all of the details, read how downsizing can revitalise your retirement.
If you do plan to take advantage of any of the above options, make sure you’re aware of your current situation and the limitations surrounding super contributions.
Marking the end of a financial year is a good time to sit back and look at your situation and reflect.
When we are busy living it can be easy to lose sight of what is most important to us. Now is a great time to evaluate your current situation and think about what you really want from the next 12 months.
What you need to know
This information is provided by Invest Blue Limited (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.
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