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Get ready for tax time

THE end of the financial year is just around the corner.
“This means that now is the time to start making sure you are taking advantage of all possible incentives to reduce your tax,” MyState Wealth Management financial planner Philip Hall said.
“If you are self-employed or derive only a small part of your income from employment, you may be able to claim a tax deduction for personal super contributions.
“Personal tax-deductible contributions are classed as concessional contributions which for the 2015-16 financial year are capped at $30,000 if you are younger than 49 years at 30 June 2015 and $35,000 if you are aged 49 years or older at 30 June 2015.”
Mr Hall said if you were an employee then consideration should be given to salary sacrificing some of your income into super to lower your taxable income.
“This is an effective way to boost your retirement savings,” he said.
“Employer (SG) contributions and salary sacrifice contributions are counted towards your overall concessional contribution cap as per above.
“On top of this, you can contribute up to $180,000 as a non-concessional contribution to your super fund each year, although you can’t claim a tax deduction for this amount.
“If you are aged 65 years or younger at any time in a financial year you may also be able to contribute up to $540,000 in one year to your super fund by utilising the “bring forward rule”, however if this is activated be aware that you cannot make further non-concessional contributions to super for the following two financial years.”
Mr Hall said if you were aged between 65 and 75 years you would need to have worked at least 40 hours over 30 consecutive days to be able to put non-concessional contributions into your super fund.
“Aside from making extra contributions to your super fund to help reduce the tax you pay, if you run a small business there are also a number of relatively new initiatives you can use to help reduce your tax bill.
“At the moment if you run a business you can claim an immediate tax deduction on related expenses that cost up to $20,000.
“This incentive is available until 1 July 2017, when the limit will drop back to $1,000.
“Small businesses that are operated in a company structure also benefit from a reduced tax rate of 28.5 per cent this year, down from 30 per cent.”
Mr Hall said there were many other steps you could take to help reduce your tax bill that included ensuring you claimed all allowable tax deductions.
“But do not wait until the last minute to get your tax affairs in order,” he said.
“Now is the time to sit down and work out if you can afford to contribute extra to your super fund and how much that amount will be.
“You also need to ensure that the funds arrive in your super fund before 30 June to be able to claim a tax deduction in the current financial year.”
Mr Hall said the better prepared you were, the more likely you would be to make use of available concessions and incentives, which would help reduce your tax and increase the money in your hand.
“It is worth talking to your accountant or financial planner so you are in the best position possible,” he said.
For more information Philip Hall at MyState Wealth Management on 1300 651 600 or visit www.mystate.com.au/wealth.
Information is current as at 18 April 2016. This is general advice only, before making any decisions please speak with a MyState Wealth Management Financial Planner.

Sources:
http://www.superguide.com.au/boost-your-superannuation/who-can-make-tax-deductible-contributions
https://www.ato.gov.au/Newsroom/smallbusiness/Lodging-and-paying/Instant-asset-threshold-increase-to-$20,000-now-law/

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About the Author: Hobart Observer

The Hobart Observer is your monthly community newspaper, reaching over 24,000 homes and businesses in and around the City of Hobart. It is the product of Nicolas Turner, Justine Brazil, Ben Hope, Simon Andrews, Tobias Hinds and guest contributors, with support from advertisers.

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