Articles
Tax tips for 2007-08
Maximise your Superannuation Contributions
By making a concessional (deductible) contribution to superannuation using your pre-tax monies, you can reduce your taxable income and therefore decrease your personal income tax liability. If you have sold an asset during the year and realised a significant capital gain, you may also be able to offset any personal income tax that would have been payable on the capital gain.
To obtain the maximum deduction, you may contribute up to:
- $50,000 pa if you are under 50
- $100,000 pa if you are aged 50 and over
You need to ensure that these limits are not exceeded as there is a penalty tax of 31.5% on the excess contributions (above the 15% taxation on Superannuation). Remember that this deduction is now per person.
Non Concessional Contributions (post tax)
Non concessional contributions of $150,000 pa applies to super top-ups or $450,000 averaged over 3 years. If you are aged between 65 and 74, you would need to satisfy the work test.
Access the Govt Super Co–Contribution if you are earning less than $58,980 pa
If you are an eligible employee (including a self employed person) and you make a personal contribution using after-tax monies to your superannuation account any time before the end of the financial year, the government will match your contributions and top up your super on a three-for-two basis by up to $1,500. Using this strategy you can generate a 150%, tax-free return on your investment within one year, and because the money is being invested in super it is concessionally taxed at a low rate as well.
Pre pay any qualifying expenses such as interest (if you have an investment property or borrowed money to purchase shares)
If you have borrowed funds to make an investment that will generate assessable income, you are entitled to claim a tax deduction for the interest payable on your loan. If you pre-pay the interest on your investment loan now – covering the next 12 months – you may be able to claim a deduction for that interest in your 2007/08 tax return.
Contribute Superannuation on behalf of your Spouse
You can receive a tax rebate for making a contribution to your spouse’s super fund if their assessable income (including reportable fringe benefits) is less than $13,800. Because it is a tax offset, you will make a direct saving against your income tax liability. The maximum tax offset available is $540 (based on your spouse's income, if equal to or less than $10,800), implying an 18% tax rate.
Salary Sacrifice into Superannuation
If you are due for a pay rise or an end of year bonus, you may salary sacrifice this into your superannuation account. You may also salary sacrifice your income in order to claim the co-contribution for the 2007/08 financial year.
Crystallising Capital Losses
Consider crystallising capital losses by selling down low performing shares/managed funds. You can then use capital losses to offset capital gains.
Transfer Investments to a lower tax rate entity (eg a Spouse or a Super Fund)
This will enable you to reduce tax payable on future investment income and capital gains.
Claim a tax deduction for Investment Expenses
Expenses must be incurred by you in the course of earning assessable investment income, eg ongoing expenses for financial advice, account keeping fees, administration fees.
First Home Savings Account (FHSA)
Assess whether this new account is suitable for you, and if so, you may wish to hold back locking in fixed term deposits past 1 October 2008 and instead consider starting a FHSA after that date.
Consider deferring cash bonuses and other Assesable Income to 2008/09
You may wish to defer income to the following tax year as the changes to the marginal income tax brackets in 2008/09 mean less tax to pay.
Make in-specie Personal Deductible Contributions to Superannuation
It may be more tax effective to hold retirement assets in superannuation than holding the assets personally.
Back