5 EOY Tax Strategies

With tax time just around the corner, we thought we will briefly outline some useful tax effective end of financial year strategies.

1. Making sure you claim your income-protection premiums as a deduction:

Many people forget that their Income protection premiums are generally tax deductible.  You can choose to hold an Income Protection either inside super or personally. To claim a tax deduction for your personal tax return, the policy must be owned by you.

2. Taking out Private Health Insurance:

For those who earn over $90,000 (single) or $180,000 (family) and don’t have private hospital cover, there is an additional tax known as the Medicare Levy Surcharge 1% - 1.5% (depending on your income level).

 3. Claiming KMs for business travel:

When driving from your office to off-site location for business meetings, you can generally claim KMs if you using your personal car for a client appointment. It is important to note, you are unable to claim a deduction for travel between home and work.

4. Pre-pay your interest on your investment loans:

When you borrow money for investment purposes, the investment will generate assessable income (often called gearing), and as a result this, you are generally entitled to claim a tax deduction for the interest on the money borrowed.

For example, if you have a geared share investment portfolio or rental property you can not only claim the interest on the investment loan for the current financial year, but you may be able to prepay up to 12 months interest on the investment loan and bring forward your tax deduction to this financial year. You may choose to do this because you are expecting capital gain in the current financial or your taxable income this year is higher than usual.

Another advantage in pre-paying interest you are locking in the interest rate you pay for the following year. This can give you certainty around the cost of your investment and seeing interest rates are low at present, it may be a strategy worth considering.

5. Donations may reduce your tax liability:

Donations or gifts of $2 or more to approved organisations and charities are tax deductible and may reduce your overall tax. Ensure you retain receipts for donations made.

The information provided above is of a general nature. This does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.