Top tax tips for 2018

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With the end of the financial year quickly approaching here are some of my top tax tips for 2018:

1. Take advantage of the new rules for deductible super contributions

Possibly the best tax deduction to be made available in years - from 1 July 2017, employees who make personal contributions into their accumulation super fund will be able to claim deduction on the contribution.

Get in quick if you want to make a contribution before the end of June, as it can take a few days for the super fund to process. 

How does it work?

If you are earning over $37,000 the government will hit you with 32.5% tax on your income. Once your income passes the $87,000 mark, your tax rate grows to 37%.

Super is taxed at a concessional rate of 15%, so for any money you add into super and claim a tax deduction for, you will pocket the difference in tax.  So, if you are earning $90,000, for every $1,000 you contribute you will pocket the difference of $220 in tax. That’s a 22% guaranteed return on your investment. No a bad little earner if you ask me.

The most important thing to remember is that if you want to claim a deduction for your contribution, you must notify your super fund before you complete your tax return, or by the end of June the following year.  Your super fund has to send you an acknowledgment of your intent before you will be able to claim.

What do you have to look out for?

There is a $25,000 cap on concessional contributions that can be made in super each year. This includes contributions made on your behalf by your employer, any salary sacrifice contributions you make and any contributions that you claim a deduction for.  If you go over the limit the government will hit you up to pay back the extra tax (not to mention some extra paperwork!), so be careful to avoid going over.

Also, Superannuation is intended for your retirement - if that’s a few years away, remember that you might not be able to access money you add into your super fund for some time. Therefore, if you have more important things for the money in the meantime, like paying off debts, then this strategy might not be the best for you.

Click here to find out more from the ATO. 

2. Check you are claiming all of your deductions

Expenses that you incur in relation to your employment, business or investments can be deductible.  Don’t forget to include any premiums paid for your income protection insurance.

The ATO provides a guide for common deductions by industry that can help you to maximise your deductions.  Another great checklist is available here.

3. Have a go at lodging your tax online via My Tax 

My Tax has been created by the ATO to help Australians complete thier tax returns online.  Using data matching, the ATO is able to pre-fill a heap of information that they already available for you, such as income from employment, investments and bank interest. All you have to do is check your income is correct, add in your deductions and away you go. 

For those with reasonably simple tax affairs It is a great little tool and can save you hundreds. If you have more complex investments or business structures, then it’s still a good idea to seek help from your accountant, as they have specialist knowledge to help you complete your returns correctly.

4. Check for lost Super via My Tax

The end of the year can be a great opportunity to tie up loose ends, so why not take the opportunity to search for any lost super that might be out there.

While you are logged onto your My Tax account, you will notice a SUPERANNUATION tab. Click on this tab, and you will find a list of all super funds that the ATO has registered to your tax file number.  This is where you can check for your lost super.

A quick look over and you may notice funds that were set up for you many years ago.  If you want to roll them over into your current fund, you can request to do this online. Have a go, there may be a great surprise waiting for you.   


General Advice Warning

All strategies and information provided is general advice only and does not take into consideration any of your personal circumstances. Please seek personal financial and taxation advice prior to acting on this information.