Top Tips to Reduce Your Tax This EOFY

Paying a lot of tax is an indication that you have a healthy income, but you obviously would like to reduce your tax payable as much as possible. Keep reading for some tax-saving tips before this end of financial year.

Contribute to super

Effective 1 July 2017, the 10% maximum earnings condition was removed for the 2017-18 and future financial years. This means most people under 75 years old can claim a tax deduction for personal super contributions (including those aged 65 to 74 who meet the work test) on their 2018 tax returns. There are some eligibility rules, and you must make payment to your fund before the 30th June 2018 to be able to claim the deduction, but this may be an effective way of saving for your retirement, while also reducing your personal income tax.

Another option is salary-sacrificing part of your income into super, which means that the contribution is taxed at only 15%, instead of the marginal rate, meaning you are contributing to your future wealth while reducing tax.


Bring forward deductible expenses

If you have the cash flow available and expect your income in the next financial year to be lower than this year’s, consider pre-paying deductible interest or bringing forward deductible expenses. By doing this, you may find that you are able to reduce your taxable income, thereby reducing your tax payable.

Depending on your personal circumstances, areas, where you may want to consider applying this, can include, for example:

  • Income Protection insurance premiums.
  • Donations to charities, which are classified as ‘deductible gift recipient’ organisations.
  • Interest payments on investment loans for things such as property or shares.
  • Cost of repairs and maintenance to investment properties that are being rented out or available/advertised for rent.
  • Work-related expenses, such as car expenses, travel expenses, clothing, laundry and dry-cleaning expenses, as well as self-education expenses, home office expenses, telephone, computer, internet expenses, tools and equipment expenses.

Be aware that the tax office is cracking down on some commonly over-claimed deductions, including travel and self-education expenses, so ensure that you are only claiming expenses that directly relate to the earning of your income and that you keep receipts or records of all expenses.

Also, new rules mean that if you are a property investor, you can generally no longer claim the cost of travelling to and from your investment property.


Organise statements, receipts and expenses

Although it’s probably a little while off before you get around to lodging this year’s tax return, you may want to consider making a start on collecting, sorting and storing your statements, receipts and expenses that are currently available to you. This may help alleviate some of the stress that often accompanies year-end preparation. Please read our ‘Items to Consider Checklist’ for a helpful list of the documentation that may be relevant to you.

More ideas

For additional ways to minimise your business and personal tax, we’ve put together the following guides for you:

Moving forward

To ensure that you are taking all financial factors into account and getting as much of a refund as possible, please contact Stone Accountants & Advisors to discuss your tax situation.