KEY SUPERANNUATION CHANGES
The ATO have introduced a new concessional cap of $25,000 for everyone. The tax deductible super contribution limit (or ‘cap’) is $25,000 for all individuals under age 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 2018. For the first time, individuals can make personal superannuation contributions (up to the cap) prior to 30 June 2018, and claim a tax deduction in their personal income tax return. The payment must be paid and received by the superfund before 30 June, 2018.
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.
SPOUSE SUPER CONTRIBUTIONS
From 1 July 2017, higher income thresholds apply when determining eligibility for the spouse contributions tax offset.
From this date, 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.
GOVERNMENT CO-CONTRIBUTION TO YOUR SUPER
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 2017/18, the maximum co-contribution is available if you contribute $1,000 and earn $36,813 or less. A lower amount may be received if you contribute less than $1,000 and/or earn between $36,814 and $51,812.
WORK RELATED EXPENSES
Don’t forget to keep any receipts for work-related expenses such as uniforms, training courses, and learning materials, as these may be tax-deductible. However, please note that the ATO is watching and checking these claims closely.
MOTOR VEHICLE LOG BOOK
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 2018. 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.
REALISE CAPITAL LOSSES
Tax is normally payable on any capital gains. You should consider selling 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.
PREPAY EXPENSES AND INTEREST
Expenses relating to investment activities can be prepaid before 30 June 2018. 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.
MAKE CHARITABLE DONATIONS
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).
DEFER INVESTMENT INCOME AND CAPITAL GAINS
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 2018. The Contract Date (not the Settlement Date) is generally the key date for working out when a sale or purchase occurred.
PROPERTY DEPRECIATION REPORT
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.
PROPERTY: PAYG WITHHOLDING VARIATION (SECTION 1515)
The 1515 application is to provide your employer with an authority from the Australian Taxation Office 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 2019 financial year.
If you would like Pradem to assist with your Section 1515 download your preliminary checklist here.