Smart end of financial year strategies to start now

By Liz Maroney, Westlawn Wealth Adviser
SMSF Specialist Advisor™
13 April 2017

With the end of the financial year approaching, now’s the time to make smart decisions about your finances and get your end of financial year strategies in place.

Here are 12 tax-effective superannuation, insurance and investment strategies that could benefit you (depending on your individual situation).

Super strategies1

  1. Get more from your salary or bonus

If you’re an employee you may want to sacrifice your pre-tax salary or bonus into super rather than receive it as cash. By doing this, you can:

  1. Make tax deductible super contributions

If you earn less than 10% of your income2 from eligible employment (eg you’re self-employed or not employed) you may want to invest in super by making personal contributions. This allows you to:

  • Claim your contribution as a tax deduction, and
  • Take advantage of the higher contribution cap that applies in this financial year.
  1. Make after-tax contributions to super

If you have an investment in your own name, consider cashing out the investment and using the proceeds to make a personal after-tax super contribution to:

  • Reduce tax on investment earnings by up to 34%, and
  • Take advantage of the higher contribution cap that applies in this financial year.
  1. Use super to manage capital gains tax (CGT)

If you make a capital gain on the sale of an asset this financial year and earn less than 10% of your income2 from eligible employment, consider investing some or all of the sale proceeds in your super. This allows you to:

  • Claim a portion of the contribution as a tax deduction, and
  • Take advantage of the higher contribution cap that applies in this financial year.
  1. Get a super top up from the government

If you earn less than $51,020 pa2, of which at least 10% is from employment or a business, you may want to make a personal after-tax super contribution. This allows you to:

  • Qualify for a government co-contribution of up to $500, and
  • Increase your retirement savings.
  1. Boost your partner’s super and reduce your tax

If you have a spouse who earns less than $13,800 pa2 you may want to make an after-tax super contribution on your spouse’s behalf so you can:

  • Receive a tax offset of up to $540, and
  • Increase your spouse’s retirement savings.

Insurance strategies           

  1. Buy insurance through super tax-effectively

You may want to purchase life and total and permanent disability insurance in a super fund if you:

  • Are eligible to make salary sacrifice super contributions, or
  • Are eligible to receive government co-contributions, or
  • Have a spouse who earns less than $13,8002 pa, or
  • Earn less than 10% of your income2 from eligible employment.

By doing this you can benefit from tax concessions and it will also make insurance premiums more affordable.

  1. Pre-pay income protection premiums and reduce this year’s tax

If you’re employed or self-employed, consider pre-paying 12 months’ income protection insurance premiums so you can:

  • Claim your tax deduction upfront, and
  • Pay less income tax this financial year.

Investment strategies

  1. Offset a capital loss against a capital gain

If you have received capital losses from your investments, you may want to utilise the capital losses against any capital gains so you can more effectively manage tax on your investments.

  1. Defer asset sales

If you’re considering selling a profitable asset this financial year, you may want to defer the sale until a future financial year so you can manage your tax on your investments more efficiently.

  1. Pre-pay investment loan interest

If you have (or considering establishing) a geared investment portfolio, you could pre-pay 12 months’ interest on your investment loan so you can:

  • Manage your cashflow more efficiently, and
  • Potentially pay less income tax this financial year.
  1. Make better use of your tax refund

If you receive a tax refund, consider using the money to:

  • Pay off non-deductable debts
  • Pay off your home loan and then borrow to invest, or
  • Fund your daily living expenses and contribute your pre-tax salary into super.

By doing this, you can:

  • Save on interest
  • Invest your refund outside of super, and
  • Boost your super tax effectively.

Get your end of financial year strategies sorted

End of financial year is approaching, so it’s time to get your strategies sorted now. To seek advice on how you could benefit from any of the strategies outlined above, contact Liz Maroney today:

Copyright © 2017

Note:
To use strategies 1 to 7, you generally need to be eligible to make super contributions. Furthermore, you won’t be able to access your super until you satisfy a condition of release.

Footnotes:
1. Super strategies should be in consideration of concessional and non-concessional caps. Penalties may apply if these caps are exceeded.
2. Includes assessable income, reportable fringe benefits and reportable employer super contributions. Other eligibility conditions apply.

Westlawn Wealth Adviser, Liz Maroney is a ...

Important information:

This information is published by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465, trustee of the MLC Super Fund, 105–153 Miller Street North Sydney, NSW, 2060, a member of the National Australia Group of companies. It is intended to provide general information only and does not take into account any particular person’s objectives, financial situation or needs. Because of this, you should, before acting on any information in this document, speak to a financial adviser and/or taxation professional before so they can help you assess which year-end strategies suit you best. The tax estimates provided in this publication are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

An investment with MLC is not a deposit or liability of, and is not guaranteed by, NAB.

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Liz Maroney and Westlawn Wealth Management Pty Ltd ABN 32 124 861 409, Authorised Representatives of GWM Adviser Services Limited ABN 96 002 071 749, Australian Financial Services Licensee, 105 -153 Miller Street North Sydney NSW 2060.