Avoid tax surprises this year with a few quick checks
The best way to avoid tax surprises that are all too common when you lodge your tax return for the year is by planning and carrying out a few checks before the end of the year.
Capital Gains and Capital Losses
Have you reviewed the assets that you have sold during the year to ensure that any capital losses that you have available are offset against capital gains?
Are there any costs that you would be required to incur before the end of the year in earning your income?
Donations and Gifts
Are there any donations or gifts that you want to make to charities that would be deductible?
Have you considered making contributions into a superannuation fund? If you are self employed, less than 60 years of age, and you receive less than 10% of your Assessable Income from Wages, you are able to contribute a maximum of $25,000 per year into superannuation . If you are between 60 and 75 years of age and self employed, the contribution increases to $35,000. Beware, deductible Contributions over this limit are taxed at 46.5%, so it’s wise to check the amount of contributions already to make sure you don’t exceed the limit.
Additional Superannuation Contributions
Have you considered making additional contributions if you are near to retirement? If you have money outside of super, nearing retirement and are under 65 you may consider making non-concessional contributions into Superannuation Fund. While the contributions of $150,000 per annum or $450,000 using the ‘bring forward provisions’, do not generate a tax deduction they do provide a significant increase in Superannuation balances. It’s also wise to check the amount of concessional contributions you have made in the year to ensure that exceed this limits.
Private health insurance
A medicare levy surcharge is imposed if your income for surcharge purposes is above $88,001 or your family income for surcharge purposes is above $176,001 if you don’t have private health insurance. It is worthwhile reviewing your personal situation to determine whether you would be better off holding private health insurance.
By answering these questions before the end of the financial year, you may be able to avoid tax surprises (which never seem to be positive) – Good Luck and Happy New Year!