As we get ready to say goodbye to another financial year, it’s the perfect opportunity to review our tax strategies. Here are five strategies to consider before June 30:
- Maximise Tax Savings with Pre-June 30 Contributions
With Stage 3 tax cuts on the horizon, making voluntary concessional contributions before the end of the financial year might save you more on taxes. For example, if you earn $80,000, your marginal tax rate will drop from 34.5% to 32%, while the superannuation tax rate will stay at 15%. So, contributions made this year, while the marginal rate is still 34.5%, will give you better tax benefits.
- Utilize Unused Concessional Contributions from 2018/19
This year is your last chance to use any unused contribution cap from 2018/19. The concessional contribution cap for this financial year is $27,500. If your super balance was under $500,000 as of June 30, 2023, you might be able to exceed this year’s cap by using unused caps from the previous five financial years. Check your MyGov account to see if you have any unused cap space.
- Consider Spouse Contributions for Tax Benefits
You might be eligible for a tax offset of up to $540 by contributing up to $3,000 to your spouse’s super account if their income is $37,000 or less in 2023/24. The offset decreases for incomes above $37,000 and phases out above $40,000. It also reduces if the contribution is less than $3,000.
- Strategize Capital Gains and Losses
It might be a good idea to get rid of underperforming investments before the end of the financial year, especially if you have gains elsewhere to offset. But be careful—avoid “wash sales.” The ATO frowns upon selling and then quickly repurchasing the same asset just to claim a loss. There needs to be a 30-day gap before you can buy back the same asset and still claim the loss.
- Prepay Deductible Expenses
Think about bringing forward any tax-deductible expenses into the current financial year by pre-paying them. This includes expenses like investment loan interest, income protection policies, or work-related costs.
Don’t forget to consult your accountant or financial adviser to ensure you’re making the best choices for your individual circumstances. Here’s to a successful EOFY!
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.