- WORK RELATED EXPENSES
Start gathering and printing off any receipts for work related expenses such as uniforms, training courses, related travel and learning materials, as these may be tax deductible.
The ATO Website has some great information sheets listing items which are deductible according to your occupation.
Click on the link, review and be prepared with your deductions & receipts this financial year.
2. MOTOR VEHICLE EXPENSES
There are a number of reasons you may be entitled to claim motor vehicle expenses as a tax deduction when used for work. Once determined if you are eligible you need to look at the methods of deduction available.
In general you have two options.
First is the Log Book Method, a percentage of actual motor vehicle expenses.
To use this method 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. You should make a record of your odometer reading as at 30 June 2019, and keep all receipts/invoices for your motor vehicle expenses. This includes registration, insurances, fuel, repairs and interest on borrowed money to purchase the car. 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 km method. This method provides a deduction of 68 cents per work related kilometres travelled.
Remember motor vehicles expense claims are per car so it’s possible to have motor vehicles expenses for more than one car if they have been used for work purposes.
See this ATO information sheet on when and how you can claim for motor vehicle expenses
3. PREPAY EXPENSES AND INTEREST
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 this financial year.
Also, other expenses in relation to your investments can
be prepaid before 30 June, including rental property
repairs, insurance, rates etc. Further other deductible expenses can be prepaid this year bringing forward the deduction this year, provided it is used with the 12 month rule, this includes memberships, subscriptions, and journals.
ATO Information Sheet: https://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/Rental-property-expenses/?page=2#Prepaid_expenses
4. PROPERTY DEPRECIATIONS REPORT
If you have an investment property, a Property Depreciation Report (prepared by a Quantity Surveyor) will allow you to claim depreciation and capital works deductions on capital items within the property and on the property itself. However, talk to us first as from 1 July 2017 changes to what you can and cannot claim on second-hand plant and equipment in residential rental premises apply if you acquired the property after 9th May 2017.
The cost of this report is deductible and is generally recouped several times over by the tax savings in the first year of property ownership.
5. CONTRIBUTE INTO YOUR FUTURE
Since 1 July 2017 anyone who makes contributions into their complying superannuation account can receive a tax deduction. If your marginal tax rate is 19% or more, contributing can be a great way to boost your superannuation and pay less tax. By putting post tax salary or pre-tax (salary sacrificing) into super rather than having it taxed as normal income at your marginal rate you may save tax. This can be especially beneficial if your nearing the retirement age.
You must ensure however that you do not contribute more than the annual limit of $25,000 which includes superannuation contributions made by your employer. Further these contributions must be received by the fund by 30th June and documentation notifying the fund of your intention to claim must also be completed.
If your considering contributing this financial year, contact us immediately as getting it right will achieve your outcome, getting it wrong can be costly.
6. PROTECTING YOUR INCOME
Possibly your greatest financial asset is your ability to earn an income. Income protection insurance generally replaces up to 75% of your salary if you are unable to work due to sickness or an accident. The insurance premium is normally tax deductible. Similar to rental property interest, income protection premiums can also be pre-paid for 12 months to increase your deductions.
Be sure to get some advice from a properly qualified adviser in the personal insurance space.
7. DEFER INVESTMENT INCOME & CAPITAL GAINS
If practical, arrange for the receipt of investment income (eg. Interest on term deposits) and the sale of any capital gains assets, to occur after 30th June.
Remember when selling an investment property or any other assets subject to capital gains tax, it is assessable in the year according to the Contract Date Not Settlement Date . ie you exchange contracts on the sale of your investment property on 20th June 2019, and settlement occurs in July 2019. The capital gain is included in your 2019 year tax return.
8. ALREADY SOLD AN INVESTMENT?
So you’ve sold a property or other investments during the year and you know you’ve made a decent profit. Contacting your accountant to get an estimate of the actual taxable capital gain and likely tax payable can save you thousands. Your calculated profit can vary greatly to the actual taxable capital gain due to many variables. Once this has been identified you still have 2 weeks to apply some of the tips I’ve included to reduce your tax bill. You may also have other non-performing assets that could help reduce the capital gain in this year. Remember if the contract is before 30th June 2019 it’s included this financial year regardless of when it settles.
9. WANT A 50% RETURN IN YOUR SUPER
A Super Co-Contribution aims to help eligible people boost their retirement savings. If you’re a low or middle income earner and make personal contributions into your super, that you do not claim a tax deduction for, the Government will also make a contribution (called the Co Contribution) and match your contribution 50 cents per $1 you contribute upto the maximum amount of $500.
Ie you make a $1,000 contribution and you satisfy the criteria; your fund will receive a $500 Superannuation Co-Contribution. Note as it’s a maximum of $500 even if you contribute $2000 you will still only receive the maximum $500 Super Co Contribution.
Rules apply around this so if your considering make a Non Deductible Contribution into super contact our office today.
10. DONATE BEFORE 30TH JUNE
This is my favourite as I get to donate to something I care about and at the same time reduce my tax. So you could say this gets the government to help support the cause that I choose to donate to. When making the donation for it to be tax deductible it must meet certain criteria.
If it’s over $2 you must have a receipt, the organisation you donate to must have DGR status, which can be found on the ATO Website, and it must truly be a gift, that is you don't expect to receive anything in return. If your considering making a large donation ensure you contact our office first, further information can be found on the ATO Website link below.