With the end of the financial year approaching, it’s time to think about strategies to maximise your finances, particularly with the forthcoming tax cuts.
Before we dive into strategies, here is a reminder of the new tax rates that will take effect from 1 July 2024:
- Up to $18,200: Nil
- $18,201– $45,000: 16%
- $45,001– $135,000: 30%
- $135,001– $190,000: 37%
- Above $190,000: 45%
(All figures exclude 2% Medicare levy.)
Maximising concessional contributions
Maximising concessional contributions to your superannuation before 30 June 2024 can be a wise move. If your total super balance was under $500,000 as of 30 June 2023, and you have accumulated unused concessional contributions from the past five financial years, consider taking advantage of the catch-up concessional contributions.
Remember, this year marks the last opportunity to leverage any unused contributions from 2018/19 as they expire after 30 June 2024.
Reviewing non-concessional contributions
From 1 July 2024, the non-concessional contribution cap will increase to $120,000 or $360,000 under a bring-forward arrangement. By limiting your non-concessional contribution under the annual cap (currently $110,000) without triggering the bring-forward arrangement this financial year, you retain the flexibility to make a non-concessional contribution of up to $360,000 in the next financial year.
Strategies for retirees with passive income
For retirees receiving passive income from investments, provided you meet the eligibility requirements, it might be beneficial to claim a tax deduction before 30 June 2024 on any personal contributions made this financial year. This could optimise your taxable income position and provide additional tax benefits.
Supporting your spouse’s super
If you contribute up to $3,000 to your spouse’s super and their income is less than $40,000 this financial year, you may be eligible for a tax offset of up to $540 – a win-win for supporting your partner and gaining a tax advantage.
Prepayment and bringing forward expenses
Depending on personal circumstances, you may want to consider prepaying 12 months interest (provided lenders allow) and bring forward tax-deductible expenses to this financial year. This can include work-related expenses, maintenance costs for investment properties, charitable donations and premiums on income protection policies.
These strategies can lower your taxable income in the current financial year.
Managing capital gains
Review any capital gains realised this financial year and consider if it’s appropriate to offset these by selling investments that may be in a capital loss position. Conversely, consider delaying the sale of investments with potential capital gains until the next financial year to manage your tax liability more effectively.
SMSF contribution reserving strategies
If you run a self-managed super fund (SMSF), you may be able to claim a tax deduction in this financial year but have the concessional contribution counted towards the next financial year. Contributions made on 1 June, for example, can be counted towards the member’s concessional contribution cap for the next financial year, provided they are allocated before 28 July.
As we approach the 30 June 2024 deadline, it’s pivotal to review your financial strategies.
The decisions you make today could not only optimise your tax position but also enhance your overall financial position for the financial year ahead. As always, personal circumstances vary, so seek personalised advice from your Apt Adviser and your tax professional before making any moves.
General Advice warning
The information provided in this blog does not constitute financial product advice or a recommendation to purchase a particular product. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners Pty Ltd is not a registered Tax Agent. You should consider your individual situation and seek tax advice from a registered tax agent before making any decision based on the content of this document. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
