Every year seems to bring with it significant change – and this year was no exception! Keeping ahead financially can take a bit of effort, so to make it easier we’ve put together a short list of things you can remember to do when before End of Financial Year or when you’re completing your tax return to reduce tax and boost your savings.
As cost of living and inflation has been causing many families a great deal of financial pain and difficulty, it’s important to find ways to maximise your finances and use techniques that you may not have thought about before.
A few ways you can lower your tax obligations at end of financial year include:
Claim Home Office Expenses
As changes have occurred in how work-from-home expenses can be claimed over the last few years, you should refresh your knowledge of the basics. For example, the fixed rate method has risen from July 2022 – from 52 cents per hour to 67 cents per hour.
If you do have a dedicated home office, you can claim using the revised fixed rate method, at 67 cents an hour for every hour you work at home. This claim covers things like internet costs, gas and electricity, stationery, and consumables like printer ink. From July 2022, you don’t need a home office to claim these things, which is a great update.
If you do have a home office, you can claim some additional expenses and depreciations, such as the decline in value or repair of office furniture and computers.
Of course, there is also the Actual Cost method of tracking your work-related home expenses. This enables you to claim for all of your work expenses by tracking the actual work-related usage of things like electricity and internet data. This involves complex calculations, so it’s often not the best choice for most work-from-home individuals!
Pre-Pay Future Expenses
One of the ongoing techniques that many people are not aware of is the potential benefit of pre-paying next year’s expenses to claim as a tax deduction against this year’s income.
Some examples are pre-paying 12 months worth of premiums for your income protection insurance or work-related expenses such as professional subscriptions and union fees. If you are unsure what you can claim, the ATO has a guide for a range of occupations.
If you own an investment property, you might also consider pre-paying 12 months’ interest on your loan and other property-related expenses.
Top Up Your Super
If your super could do with a boost and you have cash to spare, now is the time to check whether you are making the most of the contribution strategies available to you.
You can make tax-deductible contributions up to $27,500 a year, including Super Guarantee payments by your employer. You can also contribute up to $110,000 a year after tax (this increased from July 2022). And for those who are over 75, they may be able to make non-concessional contributions (after tax) of up to three times this cap in a single year.
For instance, if you recently received a windfall and are considering using the ‘bring forward’ rule, this rule allows you to bring forward two years’ after-tax contributions, meaning you could contribute up to $330,000.
And don’t forget the carry-forward rule! If perhaps you’ve had an increase in your salary or you’ve come into more money this year, think about topping up your super before tax by using your unused concessional contributions caps (if you haven’t maxed out your super contributions in previous years). You have access to your concessional contributions caps on a rolling basis for 5 years, but anything older than 5 years is ‘expired’.
Manage Investment Gains And Losses
Prior to End of Financial Year, review your portfolio for any loss-making investments. If you sell them prior to June 30, this capital loss may potentially be used to offset some or all of your gains, helping you to save on tax.
Of course, any decisions to buy or sell should fit with your overall investment strategy and not be for tax reasons alone.
If you’d like tax advice tailored to your particular financial situation or want to ensure you’re making the most of your tax advantages in the financial year ahead, we can help. You can read our comprehensive guide to planning for tax time, or get in touch today