End of financial year tax tips
The end of the financial year is edging closer. If you haven’t planned how you will maximise your income and save some tax, take note!
The most effective strategies are often the simplest and can be applied before 30 June 2023.
Here are our top 7 tips to help you:
- Defer non-essential income until the new financial year.
- Review your investment portfolio prior to 30 June to determine whether investments should be sold to offset any capital gains or losses made throughout the year.
- Ensure you are eligible for capital gains tax concessions by holding assets for more than 12 months.
- Maximise tax deductions through super contributions. Alternatively, make a contribution into super for your spouse – this could provide you with a tax offset.
- Prepay next year’s interest on investment property, margin loans, or protected equity loans, and claim the deduction this year.
- Ensure you review income distributions from family trusts. You can lose franking credits in some circumstances if a family trust election is not made.
It is also worth noting that while the instant asset write off will continue, temporary full expensing of business assets (giving eligible businesses the ability to instantly write off the full cost of new items) ends on June 30, 2023.
While the above strategies will help to minimise your tax prior to the end of this financial year, here are a few tips that can be implemented in the 2023/24 financial year:
- Make sure you hold assets in the most appropriate tax structure. Individuals, companies, trusts and super funds are all taxed differently on their capital gains and income.
- Use franking credits to reduce tax on lower taxed entities like super funds and lower income earners. Remember that excess franking credits are refundable.
- Split income wherever possible to take advantage of the progressive tax system.
In an ever-changing and complex world, seeking professional advice can help you through the maze.