Now that it’s time to put in your tax return for 2018-19, you’re probably looking at all the usual deductions to claim: bodycorp, rates, water, training, uniforms. However, one of the most overlooked deductions you can make is on after-tax super contributions. Not only does it reduce your tax burden in the present, it sets you up for a more comfortable life in the future.
You can make personal super contributions to your superannuation fund and claim it in your income tax return as an income tax deduction.
How does it work?
The best way to explain it is by an example. Steven is employed as an IT Consultant. During the 2017-2018 financial year, he earns a salary of $78,000.00. Steven makes a personal super contribution of $3,000.00 to his superannuation fund.
As tax time approaches, make sure you’re ready to claim all the deductions you’re entitled to. These include the following:
Travel. You can claim for expenses relating to travel you do for work, but not usually the trip to get to and from work.
Clothing, laundry and dry cleaning. You can claim on the cost of purchasing and cleaning uniforms and other work related clothing. It needs to be clothing specific to your work (such as safety clothing or a shirt with a logo on it) and not just general black pants or a white shirt that matches a work dress code.
If you’ve been watching the news lately, you might have heard that the change in franking credit rules is going to break open the earth and swallow our retirees whole.
Or if you’re listening to the other side of politics, it won’t. So who’s right? Who’s wrong? What’s a franking credit? Let’s start with that. A franking credit is used by the Government to avoid you paying tax twice on dividends from shares. Say you invest in a company like Google. Hang on, this article is about paying tax :). Say you invest in a company like John’s Global Meat Pies. John’s Global Meat Pies pays you $700 in dividends after paying $300 in tax on that amount ($1000 in total).
The recent banking royal commission has highlighted some appalling behaviour on the part of the big banks.
Unfortunately, the recommendations don’t tackle some of the key structural issues that lead to their poor behaviour in the first place. For instance, a lack of separation between their banking and ‘financial product sales’ businesses, which turned ordinary banking customer service clerks into salespeople. Many bank boards also don’t have a mandatory employee representative who can raise issues of malpractice and do something about it from the top down. As a result, the banks have always chased profit at the expense of many individual costumers and as the heat dies down from the royal commission, that same tendency will re-emerge. We’ve had a serious enquiry into banking every 10 to 15 years within the sector since the deregulation of the 1980s because we never fully resolve these issues.
1. They don’t get you the highest possible tax return.
This is a big one for individuals and businesses. Everyone wants to pay the lowest amount of tax possible while sticking within the law. But when you sit with your accountant and they ask you the same stock standard tax questions and habitually punch your details into a computer before churning out your predicted tax bill and quoting you on their fee…. you’re often left doubting that they found every saving possible for you. They’re just doing the bare minimum. Make sure you partner with an accountant who probes you for information, asks follow up questions and gets the information out of you they need to optimise every element of your tax return in your favour. Our staff have deep, up-to-date tax knowledge and they work harder so you enjoy the best possible tax result each year.
With Christmas around the corner, now’s a good time to put some plans in place so you can have a more profitable, less stressful 2019.
Be sure to set goals and plans that are both financial (your budget, loan balances, number of new clients you’d like to attract and personal (holidays, education, credit card balance). The old adage with goals is that they should be SMART – specific, measurable, achievable, realistic and time based. Also, make sure someone knows about your goals and can hold you accountable to achieving them. There’s nothing like a bit of constructive pressure to kick your performance up a gear. With my clients, we break down their next 12 months into 3-month segments and track how they’re doing along the way, making adjustments as we need to.
Once you’re clear on how to set goals, these are some of the areas you might like to focus on in your business over the next 12 months to help take it to new heights.
What are some goals you could develop within each?