Do you want a new mountain bike or car?
End of financial year opportunities that could get you there.
Knowing I had to write my next blog article, I asked my husband what he would like to read about. “Anything to do with finance or financial planning,” I said. His response: “Well actually, why don’t you write about mountain bikes? It is a very good time of year to get some awesome savings on last year’s model………actually, I’ve been meaning to talk to you about that….” He did have a point. This time of year, you can pick up some great savings on cars, mountain bikes, electrical goods and plenty of big ticket items by getting last year’s model or cashing in on the end of financial year sales.
It also got me thinking about the end of financial year opportunities in the financial planning world. There are plenty of opportunities to maximise your position and save on tax before the 30th June 2018 deadline, which I might point out falls on a Saturday this year, so you will need to be organised and implement ahead of the cut off. My husband will be disappointed that this article is not about mountain bikes, but he will be very excited to know, that by thinking about our position now, he may be able to buy a new mountain bike (or pay off some of our mortgage… that’s the problem with marrying a financial adviser), with some of the tax savings we make.
The following list contains actions to consider before the end of the financial year.
Tax minimisation:
- Pre-pay tax deductible expenses and interest payments
- Defer or bring forward income to reduce your tax
- Make a lump sum to superannuation and ensure it is nominated as a concessional contribution (make sure you don’t go over your cap)
- Set up private health to avoid the Medicare levy surcharge, to get the private health rebate and to avoid the lifetime health cover loading if private insurance is not taken out before turning 30.
- If you are planning to retire, or stop working, think about timing to reduce tax.
- Reviewing insurances (in some cases they may be tax deductible) and pre-paying tax deductible premiums where possible.
Government benefits and/or accessing aged care services:
- Reviewing assets and income, gifting strategies and how they will affect your pension
- Ideally aged care planning should be considered at least 5-6 years prior to admission
- Centrelink and DVA strategies such as:
- The Commonwealth Seniors Health Card (CSHC) – if you are age pension age and don’t qualify for it, you can get a CSHC
- The Low-Income Health Card (LIHC) – if you are a single person with an income of less than $552 per week, or a couple with a combined income of less than $954 per week, you may be entitled to a LIHC.
Superannuation
- Consider concessional and non-concessional contribution (ncc) strategies
- Super splitting with your spouse
- Accessing voluntary contributions made to super for the purpose of buying your first home under the First Home Super Saver Scheme,
- Government Co-Contribution
- Spouse contribution tax offset
- Managing excess contributions to super within the timeframes
- Small business Capital Gains Tax concessions
- Ensuring the tax effectiveness of your superannuation income streams by drawing down the minimum level of income before the end of the financial year.
Self-Managed Super Funds
There are a number of responsibilities that trustees of self-managed super funds should consider before the end of the financial year. These include:
- New ‘events based reporting’ obligations
- Reviewing the investment strategy, which includes insurance for each member as well as each insurance policy.
- Limited recourse borrowing arrangements should be reviewed to ensure they reflect the current requirements of the Australian Taxation Office to avoid hefty tax penalties
- Annual valuation of assets by someone with the necessary skills and experience
- Review their investment in in-house assets, based on up-to-date valuations, before the end of the financial year so that corrective action can be taken if necessary,
- Organise an actuarial certificate when members are in both accumulation and pension phase of super.
- Make sure that these meetings and decisions are all documented in meeting minutes and signed by the trustees.
As you can see, this is a very brief overview. If you would like an information sheet which goes into more detail on tax minimisation, Government benefits and/or aged care, superannuation and Self-Managed Super Fund end of financial year opportunities, please contact me at kate.zerbst@xseedwealth.com.au and I will forward the requested information sheet to you.