When it comes to getting the most from your annual tax return, there is usually a lot to think about, so we have identified a few options that could open the door to some opportunities to save on tax.

The key here is to plan ahead.

Deductions – lower your tax liability

• Pay now for some of next year’s expenses. If you have some spare cash available, paying for certain expenses before June 30 could mean you get your tax break back from the Australian Tax Office, ATO, earlier. Expenses paid in July could leave you waiting more than 12 months for the return. A popular expense in this category is prepaying interest on an investment loan, but be careful because not all expenses qualify for a tax deduction in advance.

This year the ATO is focusing on work-related expenses. If you are planning to claim expenses for things such as a home office, mobile phone, tools or equipment, make sure you claim only eligible expenses and have the paperwork to substantiate them.

• Cash back for insuring your income. You can claim the premiums you have paid for your income protection insurance as a tax deduction. Note that you can only claim the portion of the premium that covers you for loss of income, not for any benefits of a capital nature. Premiums for other personal insurance cover such as life, critical care or trauma cannot be claimed. You also cannot claim deductions for premiums that are paid from your superannuation contributions if your policy is held in your fund.

Super contributions – don’t waste the limits

June 30 is not just about deductions for expenses. It is also a good time to review your superannuation contributions to date and take advantage of the annual caps.

• Salary sacrifice or concessional contributions. The annual limit for these types of tax-deductible contributions is $27,500 per annum, regardless of age. If you are an employee, this limit covers both employer super guarantee and salary sacrifice contributions.

How much has your fund received in contributions so far this year? Do you need to review and adjust your current arrangements?

• After-tax contributions. Anyone under age 65 whether working or retired can contribute $110,000 each year to super as after-tax or non-concessional contributions. You can also contribute $330,000 in a single year by bringing forward the limit for the following two years. But – when it comes to super there’s usually a ‘but’ – check your total super balance to ensure any extra contributions do not exceed the general balance transfer cap, which is currently $1.9 million. 

And one final point on super contributions – the total contributed is based on how much is received by your fund, not when you sent it to the fund. Another reason why planning ahead is crucial.

These are just a few ways to manage how your money is taxed. Depending on your circumstances, other options might be available. 

Your licensed adviser can work with you to help you achieve what is best for you this financial year. But please don’t leave it too late.

• The information provided in this article is general in nature only and does not constitute personal financial advice. 

The entire May 8, 2024 edition of The Weekly Advertiser is available online. READ IT HERE!