As the end of the financial year approaches, it’s crucial to get your finances in order, put yourself in the best possible tax position and prepare for the year ahead.
You can view our handy 2023–24 Tax Return Checklist and read on for some steps every Australian taxpayer should consider in the lead-up.
- Review your financial and tax position
Before you can optimise your financial situation, you need to have a clear understanding of where you stand. Look closely at your income, expenses, investments, debts and savings. This holistic view will allow you to make informed decisions as you navigate the end of the financial year.
- Review whether additional super contributions make sense for you
Consider boosting your superannuation to take advantage of the tax benefits. Non-concessional contributions are made from after-tax income and are not taxed in your super fund. Alternatively, making concessional (pre-tax) contributions can reduce your taxable income and defer tax until retirement, when your marginal rate may be lower.
- Concessional Contributions: The cap for these contributions is currently $27,500. If you haven’t reached this limit from your employer’s contributions, consider making a personal deductible contribution.
- Carry Forward Unused Concessional Contributions: If you haven’t contributed up to the concessional cap in previous years, you may be able to make ‘catch-up’ contributions if your total super balance is less than $500,000.
It’s important to note that this financial year is the last opportunity to utilise the unused concessional contributions cap from 2018–19.
To use catch-up concessional contributions, your total super balance (TSB) at 30 June 2023 must be less than $500,000.
- Boost a spouse’s super and help manage tax
Make a spousal contribution to receive a tax offset of up to $540. To be eligible for the full tax offset, the recipient spouse’s income must be less than $37,000 (phasing out completely at $40,000).
Don’t miss the chance to make super balances between spouses more even and ultimately maximise a couple’s tax-free superannuation balance. Consider submitting a contribution splitting notice for splittable super contributions made in 2022–23.
- Make use of the government’s super co-contribution if you’re eligible
Check if you qualify for the government super co-contribution. If so, it may make sense to make a non-concessional contribution to receive the co-contribution. To qualify for any co-contribution, your income must be less than $58,445. Full eligibility requirements are available on the ATO website here.
- Complete a Notice of Intent with your superannuation fund
If you have made personal (after-tax) super contributions, make sure to complete a Notice of Intent form with your superannuation fund before 30 June. Your super fund will then issue you with confirmation of your after-tax contributions, which is vital if you intend to claim a tax deduction.
- Know what you can claim
Understand what you can claim to reduce your taxable income. Check your receipts and records of any work-related expenses, donations to registered charities, income protection insurance and costs related to managing your tax affairs. Remember, expenses must be directly related to earning your income, and you must have a record to prove it. Speak to your accountant to ensure you are only making eligible claims, and review the ATO’s guide for individuals and families here.
- Consider whether it makes sense to pre-pay expenses
If you have the cash flow, speak to your accountant before 30 June about whether pre-paying deductible expenses such as investment property maintenance, interest on investment loans, charitable donations or income protection insurance premiums makes sense for you. Doing so can bring forward deductions and reduce your taxable income in the current financial year.
- Understand the capital gains implications of your investments
Review your investment portfolio with your adviser to understand capital gains implications. If you have assets that can be sold at a loss, it may be a strategy to offset capital gains made elsewhere and reduce your overall liability. However, it should be discussed with your adviser before proceeding.
- Consider whether gifting makes sense for your Centrelink entitlements
If you receive the Age Pension, know and consider whether it makes sense to use your gifting limits. The current limits are $10,000 per financial year and $30,000 over a rolling five financial year period.
- Update your will and insurance policies
The end of the financial year is an excellent time to review your will and make sure it aligns with your current situation. Additionally, review your insurances – life, health, home and contents – to ensure you have adequate coverage for your income, expenses and lifestyle.
- Seek professional advice
Tax laws and financial regulations can be complex and are subject to change. Seeking advice from both a financial planner and an accountant will ensure you have a personalised strategy that aligns with your specific financial situation and goals – and maximises your financial position.
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.
