10 Ways to Minimise Personal Tax

Don't leave your tax planning until the end of the financial year. There are things you can do throughout the year to minimise your tax and avoid the mad rush to action strategies at the last minute prior to 30 June.

1. Superannuation Contributions
Making personal contributions to superannuation can reduce taxable income. Superannuation contributions are taxed at 15% compared to typical personal income tax rates of between 34.5% and 49%. There are limits and eligibility criteria so contact us to ensure you comply.

2. Motor Vehicle Log Book

Ensure you have kept an accurate and complete motor vehicle log book for at least a 12-week period prior to 30 June. You should make a record of your odometer reading as at 30 June and keep all receipts and invoices for your motor vehicle expenses.

3. Sacrifice your Salary to Super
If your marginal tax rate is 19% or more, salary sacrifice can be a great way to boost your superannuation and pay less tax. You may make tax savings by putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate.

4. Work Related Expenses
Keep any receipts for work-related expenses such as uniforms, training courses, learning materials etc. as these may be tax deductible.

5. Insurance Premiums
Possibly the greatest financial asset is your ability to earn an income. Income protection insurance offers you peace of mind that your family's lifestyle will be protected should you be unable to work due to illness or accident. Generally the insurance premium is tax deductible.

6. Prepay Expenses and Interest
Expenses related to investment activities can be prepaid before 30 June. 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. Other investment related expenses such as rental property repairs can also be prepaid before 30 June for tax savings.

7. Ownership of Investments
Consider reviewing ownership of your investments. Any change in ownership needs to be carefully planned in relation to any capital gains tax and stamp duty implications. Investments may be owned by a Family Trust which has the key advantage of providing flexibility in distributing income on an annual basis and an ability for up to $416 per year to be distributed to children or grandchildren tax-free.

8. Property Depreciation Report
If you have an investment property, a Property Depreciation Report will allow you to claim depreciation and capital works deductions on capital items within the property. The cost of this report is generally recouped several times over by tax savings in the first year of property ownership.

9. 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.

10. Defer Investment Income & 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.

We're here to help
These are just some of the key ways to approach tax minimisation. Before acting talk to your O'Brien Advisor to consider the strategies best suited to you personally. We aim to provide value to you by understanding your personal circumstances and developing strategies aimed to achieve the best outcome for you. Ph 03 8850 3333 or email obrien@obbc.com.au.
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