PREPARING for the end of the financial year is a bit more difficult this year, with a federal election just days later which could lead to huge changes for superannuation, negative gearing and business taxation.
There is no time like the present to make the most of current tax arrangements whilst you still can.
Prior to June 30th is when you can make last minute changes to lessen your tax bill and increase your long-term savings.
PAY EXPENSES, DELAY INCOME
Your first task is to look for ways to bring forward tax-deductible expenses to the 2016 financial year and delay income until July 1st. This is even more important if your taxable income is likely to be lower next year.
You might be able to pre-pay 12 months' interest on a margin loan, or pre-pay 12 months' premiums on income protection insurance held outside super, and claim the full deduction in this year's return.
You can also pre-pay membership fees for professional organisations such as the Queensland Law Society and subscriptions for work-related publications.
TOP UP YOUR SUPER
Despite current insecurity around superannuation, it is still the most tax effective investment vehicle for retirement savings.
So if you have any spare money, think about making a personal contribution to super.
However, if you have any worries about the soundest way ahead in light of the changes announced in the May budget, do seek advice from a professional.
The proposed changes will see the annual concessional (pre-tax) contribution limit lowered to $25,000 for everyone from July 1st 2017. Currently the limit is $30,000 or $35,000 for people aged 49 or over.
If you are aged over 49 it is logical to take full advantage of the higher limits in the 2016 and 2017 financial years.
If you are considering making a non-concessional (after-tax) contribution to super, be aware of the lifetime cap of $500,000 that came into effect on budget night.
REVIEW YOUR INVESTMENT PORTFOLIO
This volatile year on the financial markets may have led to some paper losses from shares or other investments in your portfolio.
Now is the time to sell your poor performers to offset against any capital gains made on the sale of other investments over the past financial year.
Where possible, it is logical to sell investments held for at least 12 months to qualify for the 50 per cent capital gains discount.
INSTANT ASSET WRITE-OFF
Small business owners with turnovers below $2 million can claim an instant deduction for the cost of assets up to $20,000.
If the May 2016 federal budget is passed, from July 1 the income tax rate for small business will reduce to 27.5 per cent so it makes even more sense this year to delay income where possible.
CLAIM RENTAL PROPERTY DEDUCTIONS
Despite tighter lending requirements for investors and uncertainty about the future of negative gearing, residential property has enjoyed another boom year in many parts of the country. Be sure to claim any allowable rental property deductions.
You might be able to claim an instant deduction for interest on your investment loan, repair and maintenance and tenancy costs such as the preparation of a lease or eviction.
Some expenses can also be claimed over a number of years, such as the cost of depreciating assets, structural improvements and borrowing costs such as stamp duty and loan fees.
Most charitable donations are tax deductible so collect those receipts and reduce your taxable income.
June is an excellent time of year to make donations if you haven't already as it won't be long before you can claim your tax back.
Myself and business partner, Grant Dougan, are currently raising funds for the Vinnies CEO Sleepout if you are looking for great cause to support.
Each night in Australia, thousands of people stay in crisis accommodation facilities run by community organisations like the St Vincent de Paul Society.
They are successful in helping many Australians get out of the tragic cycle of homelessness.
For more assistance with the changes that are coming up in the new financial year, feel free to contact me, John O'Brien on 07 3231 4004 or [email protected] Happy New Financial Year!
This has been a sponsored feature from Visis Private Wealth.
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