By Darren Withers

One minute we’re wishing each other a Merry Christmas. The next thing you know, it’s tax time.

Yes, the end of the financial year is already fast approaching. So, if you don’t want to be caught paying unnecessary tax, now is the time to start planning.

One of the things you might want to think about between now and June 30 is philanthropy. When planned carefully, tax deductible donations can make a big difference. If it’s an area that interests you, talk to your adviser.

Another thing to consider is whether you can get more into super. Making personal tax deductible contributions to super is a popular strategy. Not only will they provide a tax deduction, they can also give your retirement savings a handy boost.

If you have a high taxable income, a personal contribution to top up anything you have received from an employer is worth considering.

The total of personal deductible and employer contributions (often collectively referred to as concessional contributions) is limited by an annual cap. In the current year, the concessional contribution cap is $27,500. You could top up your contributions to this cap.

But what about those people who have a very high income? Well, sometimes it’s possible to contribute more than the $27,500 cap. This is due to catch-up concessional contributions. Since the 2018/19 financial year, any unused contributions can be used in a later year.
If you haven’t used all your cap in past years, you may have the ability to claim a deduction of well over $27,500 this year.

Here‘s an example of how that works.

Amy has a $50,000 taxable capital gain from selling her rental property. Her employer pays $10,000 per annum into her super. Over the previous three years, she hasn’t personally contributed anything extra. As the cap in each of those years was $25,000, Amy has unused contributions of $15,000 per year – a total of $45,000. This year, Amy’s employer also will contribute $10,000, and the cap has increased to $27,500, which gives her a further $17,500.

In total, Amy can put up to $62,500 into her super fund and claim it as a tax deduction. This would be more than enough to offset her capital gain.

It should be noted that this catch-up is only available to those who have a total super balance of less than $500,000 at the prior 30 June. But if you think you might qualify, talk to your adviser. If you act now, it could lead to a merry taxtime and very happy financial new year.

If you would like more information please call 1300 ELSTON or contact us.