EOFY 2019: Last minute tax planning for individuals

The end of the financial year (EOFY) is almost here, but there’s still time to make some last-minute decisions to ensure you pay the right amount of tax.

Ideally, individuals should plan out their tax strategies at the start of a financial year in July, however life is full of surprises.

Some people may have lost track of time, while others may have found themselves in a different position to where they thought they would be at this point.

Here are some tips to make sure you comply with tax requirements this financial year:

Review your self-managed super fund (SMSF)

If you are the member of a self-managed super fund (SMSF), then there may be some superannuation-related items you can claim deductions for.

Subject to aged-based restrictions, individuals can claim a personal tax deduction on concessional contributions up to the $25,000 concessional contribution cap, which includes employer super guarantee and salary sacrifice contributions that may have already been made.

So, if you are preparing for retirement and haven’t reached the cap limit for the 2018-19 financial year, then you might want to make further concessional contributions.

The SMSF itself can claim deductions for expenses related to earning taxable income, as long as the expenses are in line with the fund’s investment strategy, trust deed and superannuation laws.

An SMSF can claim fees relating to the preparation of financial statements, audits, ASIC fees, rental property expenses and more.

Assess your investment property

Real estate investors can claim expenses on their rental properties, whether it’s repairs or odd jobs around the home like cleaning the gutters.

Consider organising those jobs to be completed before June 30, so you can bring those expenses forward and claim them in the 2018-19 financial year.

Just keep in mind that you can’t claim expenses for travel to an investment property anymore.

Check your investment loans

Another option is to pay interest on a loan upfront, whether it’s for an investment property or other type of loans, to claim a deduction this year.

You will need to negotiate this with your lender however, most taxpayers can claim a deduction for up to 12 months in advance.

Importantly, check that your lender allocates funds secured against your property correctly, as you can only claim deductions against finance costs linked to the assessable income from your investments.

Other tips

Generally, you should look ahead to see what other expenses you can bring forward to make a deduction against this year rather than waiting until next year.

If you are expecting to earn less next year, then it’s better to bring any deductible expenses into the current financial year.

The reverse is also true, so if you expect to earn more next year, then it might be better to delay any deductible expenses until the next financial year.

You might also consider selling any investments that you have made a loss on before June 30 to offset any capital gains made on investments this financial year.

Any capital gains are added to your assessable income, so divesting any loss-making investments should reduce your overall taxable income.

While these suggestions will suit some, it’s always best to seek professional advice.

At LDB, we can help you make the most of the EOFY options and steer you clear of expensive mistakes.

Give us a call on (03) 9875 2900 or fill in the contact form below, and one of our experts can help you prepare for tax time.