10 Smart End of Financial Year Strategies for 2015/2016

It pays to be tax smart. It really does.

No matter what your situation, age or income, a little bit of End of Financial Year planning can go a long way. It can help you:
• boost your retirement savings
• maximise your Government entitlements, and
• minimise your tax liabilities.

We can sit down with you and look at the best strategies to see which suits you best. The following strategies are worth investigating.

Strategy If you ... You may want to ... So you can ...
1. Get more from your salary or bonus are an employee sacrifice your pre-tax salary or bonus into super rather than receive it as cash • reduce tax on your salary or bonus by up to 34%
• take advantage of the contribution cap that applies in this financial year
2. Make tax deductible super contributions earn less than 10% of your income^ from eligible employment (e.g. you are self-employed or not employed) invest in super by making concessional contributions • claim your contribution as a tax deduction
• take advantage of the contribution cap that applies in this financial year
3. Use super to manage Capital Gains Tax make a capital gain on the sale of an asset this financial year and earn less than 10% of your income^ from eligible employment invest the sale proceeds in super • claim a portion of the contribution as a tax deduction
• Increase your retirement savings
4. Get a super top up from the Government earn less than $50,454^ pa, of which at least 10% is from employment or a business make a personal after-tax super contribution • qualify for a Government co-contribution of up to $500
• increase your retirement savings
5. Boost your partner’s super and reduce your tax have a spouse who earns less than $13,800^ pa make an after-tax super contribution on their behalf • receive a tax offset of up to $540
• increase your spouse’s retirement savings
6. Pre-pay income-protection premiums and reduce this year’s tax are employed or self-employed pre-pay 12 months’ income protection insurance premiums • claim your tax deduction upfront
• pay less income tax this financial year
7. Offset a capital loss against a capital gain have received capital losses from your investments utilise the capital losses against any capital gains • manage tax on your investments more efficiently
8. Pre-pay investment loan interest have (or are considering establishing) a geared investment portfolio pre-pay 12 months’ interest on your investment loan • manage your cash flow more efficiently
• potentially pay less income tax this financial year
9. Review Asset purchases Own a small business Purchase equipment and other business assets worth up to $20,000 • instantly claim a tax deduction upfront for the full amount (The concession can apply to more than one asset purchased in the same year.)
10. Write off Bad debts Are a small business and have a bad debt outstanding from the previous year Write it off in the current year • Claim back a GST credit

Note: To use strategies in relation to super contributions, you generally need to be eligible to make super contributions. Furthermore, you won’t be able to access your super until you satisfy a condition of release.
^ Includes assessable income, reportable fringe benefits and reportable employer super contributions. Other eligibility conditions apply.
Super strategies should be in consideration of concessional and non-concessional caps.

 

Super Contribution caps for 2015-2016 Financial Year

 

Concessional Contributions Cap

Income Year Amount of cap
2015-2016 $30,000/$35,000^

^ Higher cap applies for clients aged 49 or over at 30 June 2015.
2016 Federal Budget update: The government has proposed a change reducing the limit on making concessional contributions to Superannuation to $25,000 pa effective 1 July 2017. Should this become law, you must ensure you review any ongoing contribution or salary sacrifice arrangements in place prior to this time, as a breach of the cap will result in penalty tax arrangements.

 

Non Concessional Contributions Cap

Income Year Amount of cap
2015-2016 $180,000/$540,000^

^ People under age 65 at any time in the financial year may effectively bring-forward two years’ worth of non-concessional contributions allowing them to contribute $540,000 at any time over a three year period without exceeding the cap. Note: If a person has invoked the “Bring Forward” rule in a particular FY, their non-concessional cap will remain at three times the cap in the first year. 
2016 Federal Budget update: The government has proposed a lifetime limit on making non-concessional contributions to superannuation of $500,000. This lifetime limit includes all non-concessional contributions made from 1 July 2007. Should this become law, any excess contributions will be subject to penalty taxes. We strongly recommend you seek advice in the future when further information is available regarding the proposed changes.

 

Annual Pension Drawdown Limits for 2015-2016 FY

Age Drawdown %
Under 656 4%
65-74 5%
75-79 6%
80-84 7%
85-89 9%
90-94 11%
95 and over 14%

 

"GOOD FORTUNE NEEDS GREAT PLANNING"


GENERAL DISCLAIMER:

The content of this presentation is intended to be general information only and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should consider its appropriateness having regard to these matters or obtain relevant professional financial advice before making any financial decisions.  Examples are illustrative only. Each person should obtain any relevant professional financial, taxation and social security advice before making any financial decisions.