By Darryl Leahey
Professional Financial Advise
Have you thought about how you can reduce your tax burden for the next financial year?
Unfortunately, many people adopt a haphazard approach to their taxation affairs, particularly as the end of the financial year looms. The best approach is to make it a year-round exercise, not just a series of hasty decisions in the last week of June.
You should discuss your tax liabilities with your financial adviser well before the end of the financial year to ensure your tax minimisation strategy changes as your needs and personal situation change.
In the meantime, these tips may help you with your tax planning:
1. Superannuation: Super can be a tax effective investment. If you’re an employee, you could look at contributing to super through salary sacrifice, thereby reducing your taxable income. In addition the new spouse super contributions - it’s a great way to enjoy super’s concessional tax rate whilst building up a retirement nest-egg.
2. Dividend imputation: If you own shares, certain companies pay dividends in the form of ‘franked dividends’ - dividends from which tax has already been deducted. This tax can be used to offset your own personal tax liabilities.
3. Negative gearing: If you’ve negatively geared an investment such as property, the interest on loans for income-producing investments is an allowable tax deduction.
4. Rollovers: If you’re about to receive a super payout, you can roll it over into an approved super/rollover fund and continue to enjoy the concessional tax treatment.
5. Investment/insurance bonds and friendly society bonds: The proceeds from these investments are fully tax-paid after a 10 year period. You could look at making additional annual contributions which will also be tax-free on the tenth anniversary of the original investment, subject to certain rules.
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6. Salary packaging: You could negotiate a salary package that reduces the amount of salary you take home, receiving the balance as a benefit, eg. your employer pays your car payments or your children’s school fees.
7. Income splitting: Diverting investment income from the highest paid taxpayer to the lower paid spouse is an effective way to reduce your overall tax liability.
8. Pre-paying interest: It may be worth pre-paying the following year’s interest on a negatively-geared investment, as it can produce an additional tax deduction in the current year.
9. Delay capital gains tax (CGT): Consider delaying the disposal of assets and therefore the payment of CGT until the next financial year when your tax liabilities may be lower.
10. Offset capital losses against capital gains: Capital losses are useful to offset against capital gains, therefore reducing or even eliminating the payment of CGT.
Consider these tips and the benefit you may gain next tax time. Speak with your financial adviser today to ensure you maximise your tax position in the years to follow.
Disclaimer
This editorial provides general information only. Before making any investment decisions, we recommend you consult a financial adviser to take into account your particular investment objectives, financial situation and individual needs. Guardian Royal Financial Services and its Authorised Representatives do not accept any liability for any errors or omissions of information supplied in this editorial.
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