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As the end of the financial year approaches, Now is the time to review strategies we can use to minimize our personal taxes. Below are some of the most important tax minimisation strategies for individuals.


Superannuation and Government Co-contributions

The government is giving away money to anyone who makes an after-tax contribution to their superannuation fund, and who earns less than $50,454 for the 2015/2016 year. If you earn $35,454 or less (for the 2015/2016 year), the federal government pays 50 cents for every after tax dollar you contribute to your super fund up to a maximum of $500 a year. This reduces to zero when earnings reach $50,454.


Defer Investment Income & Capital Gains.

If practical, arrange for the receipt of Investment Income and the Contract Date for the sale of Capital Gains assets, to occur after 30 June. The Contract Date is generally the date for working out when a sale occurred, not the Settlement Date.


Make Donations

Donations of $2 or more to a deductible gift recipient are tax deductible. Donations of property to such recipients may also be tax deductible. As parents we are sometimes unaware that the local School Building Fund may be a tax deductible gift recipient.


Consider Prepayment of Expenses

Individual non-business taxpayers may prepay certain tax deductible expenses up to 12 months in advance ahead and claim a deduction in the current tax year. Examples include:

  • Investment property expenses such as insurance, rates, repairs, maintenance and strata fees.
  • Subscriptions to professional journals and memberships to professional associations.
  • Interest on investment loans including share portfolios and rental properties.
  • Income protection insurance and Work-related travel and accommodation of trips to be undertaken in the next tax year.


Manage your exposure to capital gains tax

Strategies to reduce capital gains tax include realisation of losses from non-performing investments. Consider selling non-performing investments before 30 June to crystalise a capital loss and reduce a capital gains tax liability. Unused capital losses may be carried forward to offset future capital gains.


Utilise Negative Gearing

An investment property is negatively geared if the gross rental income is not sufficient to cover the finance and maintenance costs of the property. The loss incurred may be offset against other income to reduce the income tax liability.

One strategy for married couples is to hold the negatively geared property in the name of the spouse who earns the highest income and hence gets the greater tax benefit.

Alternatively, investment properties that are positively geared may be held in the name of the spouse with the lower taxable income. This may also apply to interest-bearing accounts and term deposits.


Rental Property Depreciation Report

Consider obtaining a Quantity Surveyors Report for substantial depreciation deductions for your rental property. The cost of this report is generally recouped several times over by the tax savings in the first year of property ownership. This is the one most overlooked tax deductions by individuals.


Work-related Deductions

You may claim up to $300 of work-related expenses without producing a receipt. However, if your work –related expenses exceed $300 don’t forget to keep all the receipts. We often see individuals who have paid work-related expenses that they did not know were claimable. Keep a proper summary of all your expenses such as car expenses, donations, uniforms, laundry, briefcase, computer, stationery, phone and internet, etc. If you are doing work from home, you may be able to deduct a proportion of electricity and heating costs as well as depreciation for office equipment provided you keep a diary of the hours worked at home to substantiate your claim.


Salary Sacrifice and Superannuation

Salary sacrifice can be a great way to boost your superannuation and pay less tax. Salary sacrifice contributions are pre-tax contributions which are taxed at a maximum of 15% rather than the individuals Marginal Tax Rate of up to 47%.


Contribute to Spouses Superannuation Account

If your spouse receives $10,800 or less in assessable income (plus reportable fringe benefits plus reportable employer super contributions), and you may make after-tax contributions and receive The maximum tax offset is $540 for at least a tax rebate for at least $3,000 of contributions. The tax offset is reduced to zero when the spouses earnings reach $13,800. The Coalition proposes to increase the income threshold to $37,000 from July 2017, IF it wins the 2016 Federal Election.