2012 Personal Tax Planning Checklist

9 Ways To Reduce Your Tax

The end of the 2011/12 financial year is almost here, so now’s the time to review what strategies you can use to minimise your tax.

 1. Claim Your Education Tax Refund

Families receiving family tax benefit (FTB) Part A can claim a 50% refund every year for education expenses of up to $750 for each child at primary school (maximum tax offset of $375 per child per year) and up to $1,500 for each child at secondary school (maximum tax offset of $750 per child per year).

The refund is only available for certain expenses such as laptop computers, internet connections, educational software and textbooks.

2. Superannuation Contributions

Individuals may be able to make tax-deductible personal contributions to superannuation to reduce their taxable income. The advantage of this strategy is that superannuation contributions are taxed at 15% compared to personal income tax rates of between 31.5% and 46.5%.

Superannuation contributions are limited to $25,000 per year for a person under age 50, and $50,000 for a person aged 50 and over. Any contributions in excess of these limits can be potentially taxed at a rate of 93%. Do NOT go over these limits!

To be eligible to claim a personal superannuation contribution as a tax deduction, you need to satisfy the 10% test, meaning less than 10% of your assessable income for the year is from employment.

3. Ownership of Investments

A longer term tax planning strategy can be reviewing the ownership of your investments. Any change of ownership needs to be carefully planned in relation to any capital gains tax and stamp duty implications.

Investments may be owned by a Family Trust, which has the key advantage of providing flexibility in distributing income on an annual basis and an ability for up to $416 per year to be distributed to children or grandchildren tax free.

4. Property Depreciation Report

If you have an investment property, a Property Depreciation Report (prepared by a Quantity Surveyor) will allow you to claim depreciation and capital allowances on capital items within the property. The cost of this report is generally recouped several times over by the tax savings in the first year of property ownership.

5. Sacrifice Your Salary to Super

If your marginal tax rate is more than 15%, salary sacrifice can be a great way to boost your superannuation and pay less tax. By putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate you may save tax.

6. Prepay Expenses

Expenses relating to investment activities can be prepaid before 30 June 2012. You can prepay up to 12 months of interest before 30 June on a loan for a property or share investment and claim a tax deduction this financial year. Also, other expenses in relation to your investments can be prepaid before 30 June, including rental property repairs, memberships, subscriptions, and journals.

7. Protect Your Income

Possibly your greatest asset is your ability to earn an income. Income protection insurance replaces up to 75% of your salary if you are unable to work due to sickness or an accident. The insurance premium is tax deductible.

8. Realise Capital Losses

Tax is normally payable on any capital gains. You should consider selling any non-performing investments you hold before 30 June to crystallise a capital loss and reduce or even eliminate any potential capital gains tax liability. Unused capital losses can be carried forward to offset future capital gains.

9. Qualify for a Government Co-Contribution

If your total income is less than $61,920, you may be eligible for a super co-contribution from the Federal Government. For each dollar in personal after-tax super contributions, the Government will contribute from $1 up to a maximum co-contribution of $1,000 for those earning less than $31,920. For the purposes of this test, income is taxable income plus reportable fringe benefits and salary sacrificed super contributions and personal deductible super contributions.


Talk to us TODAY before the 30 June 2012 deadline, for assistance to reduce your tax!

JWA Business & Wealth

 ’The Rocket’ Suite 1101 Level 11
203 Robina Town Centre Drive
Robina, QLD 4226

T: (075) 585-8555

E: info@jwa.com.au

The information in this document is of a general nature and does not take into account your individual needs and objectives. Please do not act on any information in this document before seeking advice from a qualified Accountant and a licensed Financial Planner.