With the end of the financial year fast approaching, now is an appropriate time for tax planning. Here we highlight the most relevant strategies for our clients. For further information and advice specific to your situation please contact us as soon as possible.
For Individuals
1. Capital Gains Tax (CGT): Capital gains can be offset against losses, so now is a good time to review your portfolio.
2. Donations: Donations or gifts of $2 or more to approved organisations and charities are tax deductible.
3. Derivation of income: In some circumstances assessable income can be deferred to the 2015 income year.
4. Maximising allowable deductions: Consider any tax deductible expenses that are imminent and assess the benefits of incurring them prior to the end of financial year. For example with rental properties, consider whether claims for capital allowance and works deduction on the property is maximised. Income protection insurance premiums can be paid prior to year end.
5. Prepayments: In some circumstances, an immediate deduction is available for non-business prepaid expenditure, for example interest on a loan relating to a rental property or on other passive investments such as a share portfolio.
6. Motor vehicle expenses: Detailed records on use of a motor vehicle will help ensure that the appropriate method is used to claim a tax deduction.
7. Superannuation:
- Salary sacrifice bonus – Salary sacrificing an end of year bonus into super may optimise your tax position.
- Superannuation non-concessional contributions – Non-concessional contributions can be made up to $150,000 p.a. or a total of $450,000 on a bring forward basis over a 3-year period.
- Superannuation rebate – A rebate of up to $540 is available for superannuation contributions made to your spouse during the 2014 year, if your spouse’s income is less than $13,800 pa.
- Superannuation caps – You should check that the total of your personal contributions and any employer contributions during the income year do not exceed $25,000 for individuals under 60 or $35,000 for all other individuals. Otherwise excess contributions tax will apply.
- Transition to retirement income streams – If you are 55 or older at 30 June 2014, you may be eligible to commence a “Transition to Retirement” pension. Benefits may include: receiving pension income while still working; ability to salary sacrifice to superannuation to access lower tax rates; and concessional tax treatment within your super fund.
For Businesses and Investors
1. Purchases of depreciating assets and motor vehicles:
Depreciating assets costing less than $6500:
- First used or installed ready for use by 31st December 2013 – immediate write off.
- First used or installed ready for use from 1st January 2014, the immediate write-off threshold is reduced to $1,000.
Motor Vehicles costing more than $6500:
- First used by 31st December 2013 – immediate write off of the first $5,000, with the balance of purchase price allocated to a depreciation pool.
- First used from 1st January 2014, the immediate write off threshold is reduced to $1,000.
Non-motor vehicle depreciating assets costing more than $6500:
- First used or installed ready for use prior to 31st December 2013 are written off in a depreciation pool at the rate of 15% in the first year and 30% in later years.
- From the 1 January 2014, depreciating assets costing more than $1,000 are written off in a depreciation pool at the rate of 15% in the first year and 30% in later years.
2. Bad debts: Bad debts should be written off prior to 30 June, with minutes prepared approving the write-off, and the appropriate adjustment for GST on the original invoice made.
3. Superannuation Payments: Make sure all superannuation is paid for employees before 30 June both for as a tax deduction for business, and to avoid any issues of excess contributions for the following year for your employees.