June 30th is just a few short weeks away – a wake up call to think about ways to reduce your tax.
Keep in mind that a basic principle of tax planning is to try to defer income to future years while, bringing forward expenses to the current financial year. Therefore, if you have money sitting in the bank and are prepared to lose access to it for a few weeks place it on a term deposit with all interest maturing after June 30th. The interest will then be taxed next year.
Conversely, if you have deductible expenses such as repairs and maintenance on investment properties, try to bring them forward so that you will enjoy your tax deduction now.
You can bring forward expenses by prepaying 12 months interest on your investment loans or margin loans. Pre-paying a year’s interest on a loan of $300,000 may cost you $24,000, but you could get up to $11,160 back as a tax refund. This strategy will require negotiation with your lender – you can’t just bank the equivalent of a year’s interest into the loan account, because all the lender will do is take one month’s interest and credit the rest to the principal.
CGT can take a chunk of any investment profits, but remember that the relevant date is the date the sales contract is signed. Therefore just deferring signing a contract until after June 30th can change a situation so that the CGT is paid when you are in a lower tax bracket. It also gives you an extra year’s use of the money you owe the tax man.
Anybody who is eligible to contribute to super but who does not have an employer making contributions for them, could also reduce CGT by making a tax deductible contribution to offset the capital gain.
As always take advice but don’t delay - when the clock strikes midnight on 30th June it will be too late.
Noel Whittaker is a director of Whittaker Macnaught Pty Ltd. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. His email is email@example.com
Sky View is a boutique, riverfront tower development of only 13 apartments over 8 levels. Located at 24 Victoria Parade, Rockhampton and designed by Award Winning...
Join the Community.
Get your local news, your way.
Update your news preferences and get the latest news delivered to your inbox.