The end of financial year is just right around the corner.
Here’s a list of how you can make the most of your tax back.
Carry forward unused contribution cap
While it is already a common knowledge that individuals are allowed up to $27,500 deductible concessional contribution each financial year, it is also good to know that you can carry forward unused cap amounts from up to five previous financial years, starting from FY 2019 – applicable to individuals with minimum superannuation balance of $500,000 before the start of the financial year in which the unused cap is to be utilised.
This gives a best-case scenario of $102,500 for 2022 tax returns. It means a big clawback of tax for contributing money to your super that you will eventually access in the future!
Make downsizer super contributions
If you’re above 65 years old and meet the eligibility requirements, you can contribute up to $300,000 into your super with the money you got from selling your home. This doesn’t eat up your contribution cap and in fact, it’s a great opportunity to top up your savings in your super.
You don’t need to buy a new home if you’re planning on moving in with your firstborn and your grandkids – because you deserve to be rent-free and happy!
Get your super in on time
If you’re a small business owner wanting to claim a tax deduction for super payments made for your employees, the super must be done and paid before 30th of June, otherwise you will miss the opportunity. Super needs to be paid to staff 28 days after the end of each quarter. If you miss that deadline for any quarter, it’s not tax deductible.
So, get your super in on time and get the tax deduction you deserve!
Manage CGT liability
If you have sold or planning to sell investments this year, it is important to manage any capital gains tax liability.
One quick tip is to assess your investment portfolio and look for underperforming assets which you can consider selling before 30th of June to trigger a capital loss that can be offset against gains made.
It is critical to manage how you distribute the capital gain and who you distribute it to if you derived the capital gain in a trust structure. Get your trust distributions right, especially if you’re looking to apply small business capital gains tax concessions.
Understand your tax timeline
It’s always a good habit to think about the tax payable going forward. Not everyone likes surprises. So, if you have a little free time, review your tax position, put enough aside, and worry less in the future.
Keep strong records
Finally, less of a tax tip and more of a reminder: it’s never too late to start getting your records together for next year. Tax agents warn from time to time that when the taxman comes knocking, a well-presented and detailed set of records will quickly resolve any issues they may have.
After all, it’s always good to have organised records. It helps you being more confident and makes you want to open the door even before the taxman knocks!
Sources: Morrows, Business Depot