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What can I claim against my tax?

It’s tax time again. What can you claim to reduce your tax?

Please take just 2 minutes to read this blog article. We’ll explain:

  • Deductions you can claim
  • The importance of a fantastic tax accountant
  • The “tax trap” you need to avoid
  • Links to more information about specific deductions

 

Deductions you can claim

According to the Australian Taxation Office (ATO) website, there are 3 things you need to claim a work-related deduction:

 

  1. You must have spent the money yourself and weren’t reimbursed;
  2. It must be directly related to earning your income; and
  3. You must have a record to prove it.

 

The ATO allows you to claim up to $300 for work related expenses without having kept any receipts – but you must have spent the money and it must be related to your employment.

 

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

If the cost of any item is over $300, it will have to be depreciated (a portion of the cost claimed each year over its effective life).

 

The importance of a fantastic tax accountant

Many accountants seem to be working for the ATO. Instead of trying to maximise what you claim, they’re often too scared of upsetting the ATO rather than fighting to get you the largest legal tax deductions.

 

Rather than using an accountant who “works for the ATO” – use an accountant who works in your best interest.

At Growth Accountants and Advisors – we’ll help you to claim every last dollar you can, and make sure you stay out of jail by not claiming anything you shouldn’t. Our team are aware of everything you can and can’t claim and what you should do this year to give you a bigger tax refund next year.

Our extraordinary accountants are all highly trained specialists at legally reducing your tax – so talk with us today!

 

The “tax trap” you need to avoid

Everyone wants to increase their tax refund (or reduce their tax payable). We’re here to help you to do this!

 

Tax saving strategies generally involve you spending money on “something” which creates for you a tax deduction. The “something” you spend your money on could be an expense, an asset, or an investment related payment (like superannuation or prepaid interest on an investment loan).

 

However – please don’t fall into a common trap of spending money just to get a tax deduction. You only save tax based on the marginal tax rate proportion on the amount you spend, NOT the full amount you spend.

 

For example, if you earn say $85,000 a year, your marginal tax rate (including Medicare levy) is 34.5%. This means any extra dollar you earn will be taxed at 34.5%, and any extra dollar you claim as a deduction will save you 34.5%.

 

So, if you spend $100 on something that you can claim a deduction for, you will get back $34.50 from the ATO. But it will still cost you $65.50. So only spend money on what you NEED, not just to create extra tax deductions for yourself.

 

Links to more information about specific deductions

It’s our job as your accountants to make the lodgement of your Tax Returns as easy and simple as possible.

We do this every day, so we know all the ins and outs of what to claim to make it easy for you.

If you want to have a look at some of the specific deductions you can claim, here are links to the ATO website (it’s actually pretty good for the ATO):

 

 

We’re here to help you!

 

To make an appointment with us to discuss and prepare your 2017 Tax Return call 03 9783 3111 or email info@growthaccountantsandadvisors.com.au

 

 

Property and Tax Changes

The Victorian State and Federal Budget’s 2017-2018 introduced property and tax changes that may affect you.

  • Stamp duty loophole abolished: From 1 July 2017, property transfers between spouses or defacto partners involving commercial and/or investment properties will no longer be exempt from stamp duty. The exemption for the principal place of residence and for transfers following a relationship breakdown will remain in place. So, if you are intending on transferring your property to a spouse or defacto partner, contact us now before the exemption is removed on 1 July 2017.
  • Off the plan concessions abolished: Off the plan stamp duty concessions will be abolished for investors from 1 July 2017.
  • Vacant residential property tax:  From 1 January 2018, there will be a tax of 1% of a property’s capital improved value on properties that are untenanted for 6 months or longer. Exceptions include holiday homes, deceased estates and renovations.
  • Foreign resident capital gains withholding tax and clearance certificate: From 1 July 2017, for real property disposals of $750,000 and above (currently $2 million), the foreign resident capital gains withholding tax will be 12.5% (currently 10%).  The existing threshold and rate will apply for any contracts that are entered into before 1 July 2017, even if they are not due to settle until after 1 July 2017.  Currently, all Australian residents selling property with a market value over $2 million are required to get a clearance certificate from the Australian taxation office (otherwise they are deemed non-residents and the purchaser is obligated to withhold 10%). The lower threshold from 1 July 2017 means that all Australian vendors will need to get a clearance certificate from the ATO for property valued at $750,000 or more. If you engage us to advise on the sale of your property we will obtain this certificate on your behalf.

 

If you have any questions about how these changes may impact on you, please contact our office 03 9783 3111

 

Superannuation year end planning for the 2016/17 financial year

Superannuation year end planning for the 2016/17 financial year

The end of the financial year always seems to crop up faster than it should.  Given the impending July 2017 superannuation changes, being on top of your end of financial year planning is as important as it has ever been.

This year it is essential that you consider maximising the existing contribution limits for superannuation before they decrease on 1 July 2017.  While maximising contributions should be front of mind it is imperative you don’t forget your other obligations as trustee of your SMSF and ensure that your SMSF stays on track!

Decreased concessional contributions cap

For anyone who was under 49 years of age on 30 June 2016 the maximum amount of concessional (tax deductible) contributions that can be made to superannuation without penalty is $30,000.  However, for anyone who is at least 49 years of age or older on 30 June 2016 the maximum amount is $35,000.  This includes amounts your employer may make as compulsory super and salary sacrifice contributions as well as any personal deductible contributions you may have made if you qualify.

From 1 July 2017, this cap will fall to $25,000 for everyone, so ensure any reserving and salary sacrifice strategies are appropriate. If you wish to maximise your contributions before June 30 make sure you talk to your professional advisor so that your salary sacrifice agreement with your employer allows the maximum to be salary sacrificed. Also ensure that all contributions are deposited with enough time so they are received by your fund before Friday 30 June 2017.

If you are older than 65 you will need to meet a work test to contribute to super in most cases.  You need to work for at least 40 hours during 30 consecutive days at any time during this financial year to make tax deductible and non-deductible contributions to super.

Claiming a tax deduction for personal superannuation contributions

If you are self-employed, an investor or in receipt of a pension and receive less than 10% of your income, fringe benefits and other related payments as an employee you may be eligible for a tax deduction for personal contributions to superannuation.  If you intend to claim a tax deduction make sure you are eligible to claim a deduction and seek advice if you are unsure.  You need to notify the fund of the amount you wish to claim as a deduction before the end of the next financial year or the end of the day on which the individual tax return was lodged, whichever occurs first. Make sure you keep all relevant paperwork to save stress when the time comes to see your SMSF advisor.

From 1 July 2017, everyone who is eligible to make a contribution will be able to claim a tax deduction for personal superannuation contributions without needing to satisfy the 10% rule.

Making after tax contributions to super

You can make after tax contributions to super which could come from your personal savings, transferring personal investments, an inheritance or from the sale of investments.  This financial year the maximum personal after tax contribution is $180,000, however, if you are under 65 years of age you can contribute up to $540,000 over a fixed three year period.  This allows you to make substantial contributions to super and build up your retirement savings.  The way it works is that if you are under 65 and make total after tax contributions of more than $180,000 in a financial year the bring forward rule is triggered.  This allows you to make non-deductible contributions of up to $540,000 in total over a fixed three year period commencing in the year in which you contributed more than $180,000.

From 1 July 2017, this cap will fall to $100,000 per annum with a $300,000 fixed year bring forward. This also means if you triggered the bring forward rule before 2016/17 but the full $540,000 was not contributed, you will be limited to a transitional bring forward cap.

Those with a total superannuation balance of $1.6 million or more will not be able to make after tax contributions past 1 July 2017.

Beware of excess contributions tax

Anyone making large superannuation contributions should exercise extreme care for any type of contributions to avoid excess contributions penalties.   This can apply to any tax deductible and non-tax deductible contributions made to super.  Making sure you do not exceed the contribution caps will save you both the money and time of dealing with excess contributions tax.

Drawing superannuation pensions

If you are in pension phase make sure the minimum pension has been paid to you for this financial year.  If you do not take your minimum pension, the pension account is to cease and the assets that supporting this pension are deemed to not be in retirement phase for the whole year meaning your fund will lose its tax exemption on earnings!

Drawing superannuation lump sums

Once you reach 60 years of age all lump sums from superannuation are tax free.  However, before age 60 any lump sums that include a taxable component can be taxable.  The taxable component includes the tax deductible contributions plus any income that has accumulated on your superannuation benefit.  No tax currently is payable on taxable amounts of up to $195,000, in total, you receive prior to age 60.

If you are eligible to draw amounts from superannuation you may like to defer receiving the amount until after reaching the age of 60 or until a later financial year when you may end up paying a lower rate of tax.

SMSF fund expenses

For SMSF members in the accumulation phase, tax deductions for expenses are usually not significant, but it’s important to ensure expenses are actually incurred or paid before 30 June to be deductible in the current financial year.

Preparing for the $1.6 million transfer balance cap and capital gains tax (CGT) relief

Be aware of the new $1.6 million transfer balance cap that will limit the amount you can keep in the pension phase of superannuation from 1 July 2017. This new cap will limit the assets you can have supporting superannuation pensions to $1.6 million.

You should make sure that as of 1 July 2017 you only have $1.6 million in pension phase.  This may require you to roll some assets currently supporting a pension back to accumulation phase where their earnings are taxed at 15 per cent.  You may be eligible for CGT relief on assets affected by the new rules.

It is essential that your plan to comply with the transfer balance cap and all relevant documentation is formulated by 30 June 2017. Minutes should be created detailing the fund members’ intent to transfer assets out of retirement phase to avoid breaching the new transfer balance cap. Minutes documenting how CGT relief is intended to be undertaken should also be produced.

Rebalancing accounts between spouses

The end of financial year is also the perfect opportunity to rebalance pension accounts between spouses before the new superannuation rules take effect on 1 July 2017. As long as you have available contribution space and are eligible to withdraw, rebalancing will ensure that super balances are as even as possible and the $1.6 million transfer balance cap is maximised per member.

Transition to retirement income streams losing their tax-exempt earnings status

From 1 July 2017, superannuation fund members will lose the tax-exempt treatment of earnings on assets that support a transition to retirement pension (TTR). Members will still be able to start new or maintain existing TTRs, but they should be reviewed before 30 June in accordance with their SMSF’s objective.

How can we help?

If you have any questions, require assistance or would like further clarification with any aspect of your end of year superannuation tax planning, please feel free to give call us on 9783 3111 to arrange a time to meet so that we can discuss your particular requirements in more detail.

Changes to concessional (pre-tax) contributions

In the 2016–17 Budget, the government announced a number of changes designed to improve the sustainability, flexibility and integrity of Australia’s superannuation system. One of the changes was the lowering of the annual concessional contributions cap.

The Australian Taxation Office has released a fact sheet regarding the changes to the concessional contributions cap. To see if you are affected, please follow the link below to the fact sheet.

https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/js38724_C_SPR_03_Changes%20to%20concessional%20contributions%20cap.pdf

Should you have any queries relating to the changes to the cap, please do not hesitate to call our office 9783 3111.

Change to non-concessional (after-tax) contributions cap

In the 2016–17 Budget, the government announced a number of changes designed to improve the sustainability, flexibility and integrity of Australia’s superannuation system. One of the changes was the lowering of the annual non‑concessional contributions cap.

The Australian Taxation Office has released a fact sheet regarding the changes to the non-concessional contributions cap.  To see if you are affected, please follow the link below to the fact sheet.

https://www.ato.gov.au/uploadedFiles/Content/SPR/downloads/js38724_B_SPR_02_Non-Concessional_Contributions.pdf

Should you have any queries relating to the changes to the cap, please do not hesitate to call our office 9783 3111.

Choose the right SMSF strategy and potentially pay ZERO tax!

In the lead-up to 30 June 2017, we want you to be aware of how using a SMSF as a tax saving strategy can have long lasting benefits to you and your family wealth.

 Watch the 2 ½ min video below to learn how our expert tax planning advice can help you reduce tax and increase your wealth at the same time.

Contact us today! The sooner we get started, the sooner we can help you save tax – well before 30 June for sufficient time to implement tax saving strategies.

Imagine what you could do with your tax saved!

  • Reduce your home loan
  • Top up your Super
  • Have a holiday
  • Deposit for an Investment Property
  • Pay for your children’s education
  • Upgrade your Car

How to “cap” the tax on trust distributions using a “bucket company” – save tax!

In the lead-up to 30 June 2017, we want you to know why using a “bucket company” can be a great strategy to saving tax on trust profits distributed.

Watch the 2 min video below to learn how our expert tax planning advice can help you reduce tax and increase your wealth at the same time.

Contact us today! The sooner we get started, the sooner we can help you save tax – well before 30 June for sufficient time to implement tax saving strategies.

Imagine what you could do with your tax saved!

  • Reduce your home loan
  • Top up your Super
  • Have a holiday
  • Deposit for an Investment Property
  • Pay for your children’s education
  • Upgrade your Car

 

How to capitalise on your last chance to make BIG super contributions

In the lead-up to 30 June 2017, we want you to be aware of your Last Chance to make BIG Super Contributions.

Watch the 2 min video below to learn how our expert tax planning advice can help you reduce tax and increase your wealth at the same time.

Contact us today! The sooner we get started, the sooner we can help you save tax – well before 30 June for sufficient time to implement tax saving strategies.

 

Imagine what you could do with your tax saved!

 

  • Reduce your home loan
  • Top up your Super
  • Have a holiday
  • Deposit for an Investment Property
  • Pay for your children’s education
  • Upgrade your Car

We look forward to meeting you!

 

 

 

The Secrets to Tax Planning

In the lead-up to 30 June 2017, we want you to understand the Secrets to Tax Planning.

Watch the 2 min video below to learn how our expert tax planning advice can help you reduce tax and increase your wealth at the same time.

https://youtu.be/gmqkI-6SfSE

Contact us today! The sooner we get started, the sooner we can help you save tax – well before 30 June for sufficient time to implement tax saving strategies.

Imagine what you could do with your tax saved!

  • Top up your Super
  • Reduce your Home Loan
  • Have a holiday
  • Deposit for an Investment Property
  • Pay for your children’s education
  • Upgrade your Car

We look forward to helping you!

Tax Planning Starts Now

There are 5 key things all business owners must consider right now. Some of them are brilliant wealth creation ideas. Please read on…

 

tax planning 2

30 June will be here before we know it. Let us help you get the most out of the upcoming months.

 

Too often, we end up suffering because we have procrastinated and not made a positive decision to do something.

If we all leave your tax planning until the end of May and early June, quite frankly there may not be enough time to do anything significant to legally reduce your tax.

 

So, for 2017, our invitation to you is to start now with your tax planning.

 

5 Key Tax Planning Strategies

Over the next five weeks, we will send you one email per week covering one of our five key tax planning strategies.

These are:

  1. The Secrets to Tax Planning
  2. Last Chance for big super contributions
  3. Why use a “bucket” company?
  4. Why use a SMSF?
  5. Trust Distribution Resolutions before 30 June

 

So, keep an eye out for our emails over the next 5 weeks, and we’ll outline in detail for you how to save $ and at the same time grow your family’s wealth in a low-risk manner.

 

How our tax planning service works

  1. First, we request from you details of your expected income and business profits for the 2017 tax year (1 July 2016 to 30 June 2017).

This includes all:

  • wages / employment income
  • interest, dividends and rental income received
  • business profits / losses; and
  • any capital gains / losses you expect to make.

2.  Secondly, we discuss all your tax planning options. Some of these may be things to do in your business, and some of these may be investment/wealth creation options.

3.  Third, we provide you with a report that explains in plain English the tax planning strategies we recommend and exactly how much tax you will save.

4. And finally, we provide you with an easy-to-follow action plan to ensure that both you and we can do everything that needs to be actioned before 30 June.

 

Based on this information, we estimate your taxable income and your tax payable before any tax planning strategies. For example, we may calculate (based on your information) that you have a taxable income of $100,000 for 2017. This would result in $26,832 tax and Medicare levy payable.

Contact us today to get started!

Don’t wait until June, now is the time to have a chat to us.

 

 

General advice disclaimer
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.


 


 


 

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