With 30 June fast approaching, it’s time to get moving on your tax lodgement. Some of you might leave it to the last minute and then throw a box full of receipts to your accountant! But at BlueRock we like to get on the front foot and utilise tax planning strategies ahead of time that minimise tax losses and maximise wealth, all while playing by the rule book.
Why Consider Personal Tax Planning Strategies?
Personal tax income (or individual tax income) is based on your wages, salaries, and any other form of income such as rental income and capital gains from cryptocurrency or stocks. Keeping the following tips in mind will enable you to firstly, know what to expect in terms of declaring income that you haven’t already paid tax on; and secondly, maximise your tax return so you can claim back more of your hard-earned money.
These are tax planning strategies that your accountant will be considering when working on your individual tax return. If you’re across these things, it will make it so much easier on you…and your accountant!
Timing Income After June 30
With the introduction of reduced tax rates commencing 1 July 2024, now is the perfect time to consider delaying or declaring any income until after June 30. This will mean you pay the tax on it in the next financial year at the reduced tax rates. Consider the timing of these income streams to decide what works best for you:
- Bonuses
- Franked dividends from private companies
- Capital gains events (selling an asset that results in a capital gain or loss)
- Cryptocurrency
Timing Expenses Before June 30
Expenses relating to investment activities and work-related expenses can be paid before 30 June 2024. This means that the relevant deductions can be expensed at the higher tax rates in the current financial year.
Don’t delay paying those rental property repairs and work related expenses such as membership, protective clothing etc. Consider prepaying your interest up to 12 months before 30 June on any investment properties or share loans. Paying these expenses before 30 June will count towards lowering your income and increasing deductions resulting in a favourable tax outcome.
Sound confusing or time consuming? Leave it to the experts at BlueRock to guide you through all the details and get you through another tax year.
Voluntary Superannuation Contributions
If eligible you could benefit from a personal tax deduction by making a personal concessional contribution to super before 30 June via:
- The Concessional contributions cap is $27,500 or
- Catch-up contributions from unused prior year caps.
Please note that we recommend you speak with your financial advisor prior to making any contributions to superannuation. It's also worth noting that from 1 July 2024, the concessional contributions cap is increasing to $30,000.
Other Individual Tax Considerations
- Salary packaging and salary sacrifice arrangements are an effective way to reduce your taxable income. These might include additional superannuation contributions, healthcare, living away from home expenses, or a salary sacrifice car.
- If you have Income Protection Insurance , the premiums paid are usually tax deductible.
- You can claim a deduction for self-education expenses if the education relates to your current work situation or if you receive a taxable bonded scholarship.
- Working From Home (WFH) expenses can be deducted in relation to internet, mobile, home phone, stationary and computer consumables, plus energy expenses which are related to WFH. The ATO has 2 methods, the actual cost and the set-rate method. You will need a diary to record the method and hours WFH. We know all the in’s-and-outs of WFH and will ensure the best method is used to get the highest deduction.
- Donations to a registered charity, public ancillary fund or private ancillary fund are tax deductible. So remember to ask for a tax receipt. Keep in mind that ‘go fund me’ donations are only deductible if it was made to a registered charity.
Personal Services Income
If you're in a personal services industry such as a medical profession, graphic design or IT consultancy, your income earned is derived from personal skills. These incomes are deemed as Personal Services Income (PSI). The ATO defines PSI as income derived by the personal efforts or skills of an individual.
The ATO looks through any trading structures such as trusts or companies to attribute any PSI earned by an individual from their personal efforts to the individual themselves. Therefore it’s important to ensure that any profits earned when operating via a trust or company are appropriately paid out to you before 30 June.
Get the Support You Need to Grow Your Personal Wealth
No matter what your individual circumstances are, there are different tax strategies to consider to make the most of your tax return. Whether that relates to your superannuation, personal services income or SMSF, BlueRock's business advisors can help make tax time less of a burden for you.
If you’re ready to maximise your personal income tax for FY24, get in touch with one of our personal accounting experts via the form below.
