The end of the financial year can sneak up on you, can’t it?
Before you know it, 30 June is approaching – or has past – and you aren’t as prepared as you wanted to be.
Unlike the onset of spring, when our minds perhaps turn to more growth-oriented ideas, the wintry end of the financial year has us thinking about reducing our tax exposure instead.
The good news is there are many ways you can legitimately reduce your taxes!
So here are 13 tax tips to consider in the lead-up to 30 June.
- With prepayment of next year’s interest expenses, remember that the ATO will only allow this when the investment loan is on a fixed term and not if the loan is variable.
- Consider full payment of the year’s property expenses such as rates, insurances, land tax or other expenses.
- While depreciation is a well-used strategy, many investors ignore using a scrapping schedule when a renovation has been done during the year. Many investors who co-own a property through a joint tenancy or tenants in common, work off one depreciation schedule as opposed to a split schedule. Both these strategies should improve cash flows.
- If refinancing your fixed loan borrowings, any break fees or outstanding fees such as lenders mortgage insurance can be expensed.
- It’s important to understand that the sale date for tax purposes is the date of contract, so if possible, delay a contact signing until after 30 June.
- If you are required to work from home, then you can claim legitimate expenses such as energy costs. If renting and you leased a larger property to have a work space, then the additional costs are deductible on a pro-rata basis. The thing is any home office deductions for the property – i.e. interest as opposed to items such as energy costs when in your main residence – will reduce the tax-free component when sold.
- You can claim educational improvement costs, which are related to increasing or retaining your current position such as undertaking further higher educational qualifications in your profession.
- Don’t forget any required travel costs that you paid to see clients during and part of the course of your employment can be claimed.
- Another deduction that many people fail to claim is the cost to prepare your tax returns by a qualified professional.
- If you are anticipating a lower 2018, then either retain funds in your company for payment next year or, if operating from a trust, distribute to a corporate beneficiary. However you must ensure the corporate beneficiary has a trust as shareholder, if at a lower marginal tax.
- If using a discretionary trust, you must complete distribution minutes.
- It’s also a good idea to look at your business structure. This is because many owners may pay significantly more tax on either a business sale if operating under a company structure or are operating from an inefficient structure. If considering a restructure, compete before 30 June so that you can begin the new financial year appropriately.
- Consider prepayment of expenses such as supplier invoices, rates and insurances, etc. if you have received payment advice.
The end of the financial year doesn’t have to be a time of tax turmoil.
Rather, with a little planning as well as professional advice and guidance, you can be ready for the start of the next business year.
You can also legitimately reduce your tax bill, which may mean 30 June soon becomes a date you look forward to instead of one that you try to ignore.
from Property UpdateProperty Update https://propertyupdate.com.au/13-ways-reduce-tax/