It’s ‘almost that time of year’ again! As the end of each financial year approaches, it might be worthwhile considering strategies to minimise the amount of tax you pay, not only for this year, but next year as well. Here are a few tax tips worth considering, before the end of the financial year.

Tip 1: A tax deductible way to manage risk

Income protection insurance is an essential part of any financial plan, designed to secure your family’s lifestyle in the event of illness or injury.

Income protection insurance premiums are generally tax deductible, so if you purchase income protection insurance and pay your annual premium before 30 June 2014, you may be able to include the deduction in this year’s tax return. Business owners may also be able to claim deductions on their business insurance premiums.

Tip 2: Avoid the Medicare levy surcharge

The Government has made significant changes to the Medicare levy surcharge and the private health insurance rebate from 1 July 2012. If you currently pay the surcharge, consider taking out private health insurance before 30 June. Even though you might have private health insurance, you may find based on your circumstances and income, your private health rebate could reduce from 1 July 2012.

Tip 3: Defer gains or use losses?

Do you hold investment assets that have fallen in value? Apart from your super investments, did you know that, by restructuring your investment portfolio and selling your assets before 30 June this year, you could realise your losses and reduce tax on any capital gain.

If, however, you have assets that have increased in value within either your investment or superannuation portfolios, then it may be best to defer the realisation of those assets to the next financial year and defer the tax liability. It may also be beneficial to hold an asset for at least 12 months so that you can access a capital gains tax discount.

Tip 4: Pre-pay your investment expenses

Gearing (borrowing to invest) can be an effective way to achieve long-term lifestyle and financial goals. As an added bonus, the interest that you pay on your investment loan is tax deductible. If you have commenced a gearing strategy, or are about to set one up, pre-paying your interest bill for up to 12 months before 30 June 2014 may enable you to bring forward your tax deduction and pay less tax this financial year.

Tip 5: Keep your receipts

The most common reason why people don’t take advantage of tax deductions is simply because they don’t keep receipts. While keeping receipts for big ticket items is necessary, you don’t always need a receipt for the smaller items such as stationery and books. If the total amount you are claiming is $300 or less, you need to be able to show how you worked out your claims, but you do not need written evidence.

If you are a tradesperson or if you have to wear a uniform for work you might find the clothes or laundry expenses are tax-deductible.

Tip 6: Salary sacrifice into super

Salary sacrificing into super has many benefits as it not only helps to increase your super savings but could also reduce the amount of tax you pay.

By selecting an amount of your pre-tax salary (or even a discretionary cash bonus) to salary sacrifice into super, this amount will be automatically deducted from your salary, and deposited directly into your super fund. Additionally, the reduced salary amount that you actually take home then becomes your assessable income for tax purposes. This may enable you to move down a tax bracket, reducing your amount of total tax payable.

Tip 7: Get your Government co-contribution

The Government co-contribution (of up to a maximum of $500) is one of the most straightforward and effective ways for you to increase your super savings. Employees and self-employed people, aged under 71 as at the end of the financial year, who earn below $48,516 pa may be eligible. If you are eligible, simply make a personal non-concessional contribution into your super before 30 June and the Government will match that contribution by up to 50% (up to a maximum of $500).

30 June is fast approaching, so it is important to assess whether you are taking full advantage of all the opportunities for the end of this financial year. To find out more, please contact one of the Adviser fp team by CLICKING HERE.