The ATO is watching and checking these claims closely. ATO audit activity is significant.
Make sure you have receipts for/paperwork to support work-related expenses such
as uniforms, training courses, and learning materials, as these may be tax-deductible.
Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at
least a 12-week period. The start date for the 12-week period must be on or before
30 June 2019. Also ensure you keep all receipts and invoices for your motor vehicle
expenses. Once prepared, a log book can generally be used for a 5-year period.
An alternative (with no log book needed) is to simply claim up to 5,000 business
kilometres (based on a reasonable estimate) using the cents per kilometre method.
The concessional cap for 2018/19 is $25,000 for all individuals under 75. Individuals
need to pass a work test if over age 65. Consider making the maximum tax deductible
super contribution this year before 30 June 2019. Individuals can make personal super-
annuation contributions (up to the cap) prior to 30 June 2019, and claim a tax deduction
in their personal income tax return. The payment must be paid and received by the super
fund before 30 June, 2019.
Alternatively, salary sacrifice your salary into your super if your employer allows it.
However note that certain conditions need to be met to ensure the salary sacrifice
arrangement is complying.
You may be eligible for a tax offset of up to $540 on super contributions of up to
$3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a.
or less. The offset gradually reduces for income above $37,000 p.a. and completely
phases out at $40,000 p.a. and above.
If you are on a lower income and earn at lease 10% of your income from employment
or carrying on a business and make a “non-concessional contribution” to super, you may
be eligible for a Government co-contribution of up to $500. In 2018/19, the maximum
co-contribution is available if you contribute $1,000 and earn $37,697 or less. A lower
amount may be received if you contribute less than $1,000 and/or earn between
$37,698 and $52,697.
Tax is normally payable on any capital gains. You may wish to sell any non-performing
investments you hold before 30 June to crystallise a capital loss and reduce or even
eliminate any potential capital gains tax liability. Unused capital losses can be carried
forward to offset future capital gains.
Expenses relating to investment activities can be prepaid before 30 June 2019.
You can prepay up to 12 months of interest before 30 June on a loan for a property
or share investment and claim a tax deduction for this financial year. Also, other
expenses in relation to your investments can be prepaid before 30 June, including
rental property repairs, memberships, subscriptions, and journals.
Consider giving money to your favourite charity to reduce your tax and help
someone less fortunate. Ensure the donation is made in the name of the highest
income earner and that the charity is a Registered Deductible Gift Recipient (RDGR).
If practical, arrange for the receipt of Investment Income (e.g. interest on term deposits)
and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2019.
The Contract Date (not the Settlement Date) is generally the key date for working out when
a sale or purchase occurred.
If you have an investment property, a Property Depreciation Report (prepared by a
Quantity Surveyor) may allow you to claim depreciation and capital works deductions
on capital items within the property and on the property itself. The cost of this report is
generally recouped several times over by the tax savings in the first year of property ownership.
The 1515 application is to provide your employer with an authority from the ATO to reduce the
amount of PAYG withholding from your regular salary. This is usually in expectation of a significant
difference between your normal salary and your likely assessable income brought about by a
negatively geared property investment. The benefit of this is that it increases your amount of
‘take-home pay’ to assist you with ongoing costs associated with a negatively geared property,
primarily the interest expense. So if you have a negatively geared investment property and
intend on submitting a Section 1515, now is a good time to arrange this to ensure it is in place prior
to the first pay of the 2020 financial year.
If you would like Pradem to assist with your Section 1515 download your preliminary checklist here.