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Checklist and Tips for a Tax Return
In order to help you with your tax return, we have provided a checklist which outlines the income and fees required to reveal to the ATO when presenting your return. Additionally, we have also given a general idea of the different kinds of taxation offsets and reductions you could be permitted to claim, as well as other useful tax tips.
Tax offsets and reductions
You may be entitled to some of the tax offsets and deductions below for this year, up until 30 June 2019.
Offset for private health insurance
Depending on how old you are and the income you receive, you could be entitled to a tax offset, possibly up to 33.4% on private health insurance. If you have not yet claimed a lower premium on your health fund, you may be able to claim an offset for your tax return.
Spouse super contribution offset
If you have paid personal superannuation contributions for a spouse, you may be able to claim a tax offset up to $540 annually. You may be eligible if you make a maximum of $3,000 in spouse contributions each year if your spouse has an income of less than $37,000 yearly, and a partial offset on tax for spousal earnings of up to $40,000 annually.
Tax hints for superannuation
Superannuation can often be a very tax-effective tool to help you save for your retirement. Here are a few tips to help you get the most from your super.
For the 2018 to 2019 tax year, the limit on any after-tax (also known as non-concessional) super contributions is $100,000 for each person yearly, or a maximum of $300,000 over three years for those who use the bring-forward provisions. While the ability to make these kinds of contributions and benefit from the 3 year bring-forward provision can depend on your overall super balance on the 30th of June from the previous tax year, it can also be subject to how old you are and if you’ve fulfilled the work test (if you’re in-between the ages of 65 and 74).
Concessional contributions, which are those that are made using pre-tax money, are often restricted to $25,000 per individual annually. Keep in mind that voluntary concessional contributions, including salary sacrifice strategies and personal deductible contributions, often have age limitations and the work test for those between the ages 65 and 74, too.
Salary sacrifice strategies
A salary sacrifice plan can often allow you to start making contributions to super using cash from your pre-tax salary. Your salary will then be reduced by the sum that you sacrifice. The advantages of doing so tend to be two-fold: not only can it increase your super balance, but it can also help to lessen your taxable income, which often results in a reduction to the sum of tax you pay. In addition, these types of contributions are generally concessionally taxed at 15% (with a maximum of 30% for those with an income of over $250,000) instead of the usual marginal tax rate, which in some cases can go up to 47%.
Personal deductible contributions
From the 1st of July 2017, if you’re able to contribute to super, you may be able to make voluntary personal contributions and get a deduction on your tax up to the limit of your concessional contribution.
This provides you with more flexibility to add to the concessional contributions from your employer, even more so if they don’t offer you a salary sacrifice. For example, you could time your last contributions up to the 30th of June each year and get the most out of your pre-tax contribution cap and the consequential tax benefits.
If you get a minimum of 10% of your earnings from employment and this comes to less than $37,697, you could be entitled to the highest super co-contribution of $500 from the authorities for a non-concessional contribution of $1,000. However, the co-contribution is likely to phase out when you reach an income of $52,697 or more.
The Australian Taxation Office uses data on income’s tax returns and contribution statistics from your super fund to decide whether you are eligible.
If you would like to split your contributions with your partner, be sure to keep in mind that typically, you can only do this during the year after you made the super contributions. Consequently, from the first of July 2019, you could have the chance to split a maximum of 85% of the pre-tax contributions you made in the 2018 to 2019 tax year with your partner.
Aside from getting the most from your super, there are often other methods to reducing your tax liability.
Capital losses and gains
Capital gains generated from selling an investment property (as well as shares and capital losses) may be able to help counterbalance your capital gains. For instance, you could have sold investments that weren’t suitable for your situation anymore and capital losses that occurred as a result of this can be offset against the gains you’ve made over the past year. Generally, any unused losses could be passed on to offset capital gains made in the future.
An expert’s advice and help should be sought before you decide to make any changes to your finances and investments.
If you’ve got an investment loan, you may be able to make plans to prepay the interest on said loan up to a year earlier, and get a tax deduction in the year that you prepaid your loan’s interest.
Negative gearing is a different type of strategy utilised to keep on top of tax liabilities. Geared investments often use borrowed finances to allow for a higher level of investment that would probably be unachievable otherwise.
Negative gearing is the term given to the excess costs of borrowing when it is more than the income made by the investment. This additional fee can often lessen the amount of tax required on other income. By investing in shares you could gain imputation credits, which can be utilised to lower your tax payments by even more.
Income protection insurance
If you happen to have an income protection plan, any premium payments that you make are likely to be tax deductible.