As the end of the financial year fast approaches, we all know that now is the time to get prepared for tax time and make sure that our finances are in order. However, there are also a couple of extra things we can do to earn more money back in our pockets.
Read on for the Rising Tide EOFY must-do list, which can help you boost your investment savings and reduce the amount owed to the Australian Tax Office (ATO).
1. Pre-pay your investment interest
Now is a great time to for all investors to review their tax and investment strategies. For property investors, a great strategy you may want to consider is pre-paying the interest on your investment property loan – and with interest rates historical low, now could be the perfect time!
Property investors can prepay up to 13 months of interest that would normally be incurred throughout the year as one upfront interest payment. The interest rate applied is fixed at an annual discounted rate and works best with interest-only investment loans.
2. Take advantage of government co-contribution
If you or your spouse earn less than $36,021, it’s a great idea to take advantage of the ATO superannuation co-contribution scheme, designed to help low-to-middle income earners boost their retirement savings.
For example, if your spouse were to earn $36,021 or less and you make a contribution on their behalf, the government will pay up to $500 at a rate of 50c for every $1 you contribute. However, the rate of co-contribution reduces as your earnings increase.
3. Don’t forget that superannuation guarantee contributions count towards your cap
When making additional contributions to your superannuation, it’s important to remember that your superannuation guarantee (the compulsory superannuation contribution made by your employer on your behalf) counts towards your overall concessional cap.
This means that if you are planning to make a voluntary contribution under a salary sacrifice arrangement, you need to watch out for exceeding your set concessional contributions caps for 2016/2017. If you’re aged 49 or over on 30 June 2016, your concessional cap is $35,000. For ages 48 and under, your concessional cap will be $30,000.
4. Bring forward any major business expenses
For all the business owners out there, we recommend taking a look at any business expenses or purchases that can be paid now, ahead of time.
If your business has an annual turnover of less than $10 million (which has been raised from $2 million), you can claim expenses of up to $20,000 in depreciating assets in each single instant write-off each financial year.
This is provided that the asset was first used or installed, ready for use in the current financial year. Any assets exceeding $20,000 or more cannot be immediately deducted and will continue to be deducted over time using a small business asset pool.
5. Get organised for next year
Lastly, there’s no better time than the present to get organised and make sure you’re financially fit for the financial year ahead!
Is there a way you could maximise your efficiency to save yourself some time next year? Think about overhauling your record and booking keeping systems, and consider setting yourself some financial goals to work towards over the next 5 or 10 years.