MONEY MATTERS MONDAY 18TH JUNE 2018
Last Chance for Tax Savings and Benefits
With just over a week until the end of the financial year it’s time for a quick review of the options to earn a tax refund or financial reward from the Government. Actions must be completed by Friday 29th. For example, super contributions must be in the fund on that day.
There are new options this year so it’s worth checking which ones might work for you. Anyone who has an investment loan, a margin loan, or against their home or property, could consider drawing the loan down more and increasing their investments.
Managed funds and shares
Managed funds and shares can still be set up by June 30. Investors can pay the interest on the loan for the next year and claim the tax deduction in this tax year.
Self-employed people can contribute to super and claim tax deductions for the amounts. This is a great way to reduce tax but it is more important than that. It is essential to save for retirement.
Self-employed people who don’t contribute because it isn’t compulsory risk becoming the retired poor while their employee friends are well off due to mandatory employer contributions.
A new rule this year allows employees to claim tax deductions for personal super contributions. This will benefit many people. They must stay within the $25,000 contribution limit which includes employer and salary sacrifice amounts.
Any employee with savings they can put away for retirement should put extra into super, within the limit. They can complete their tax return soon and earn a quick refund or rebate while their money builds for retirement.
The spouse super contribution rules are now much more user friendly. People who put $3,000 into the super account of a low-income spouse can take $540 off their tax bill. The full rebate applies when the spouse’s income is up to $37,000 and a part rebate applies up to $40,000 per annum.
The Government co-contribution scheme pays an extra $500 from the Treasury into the super account of anyone earning less than $36,813 who puts $1,000 into their own super account. That’s an instant 50 per cent return.
People with larger sums available can make non-tax-deductible contributions of up to $100,000 each year. This suits older workers seeking the tax-free benefits of super in retirement.
First Home Super Saver Scheme
The new First Home Super Saver Scheme offers first home buyers a much better way to save a deposit, from pre-tax pay. If they already have some savings they can put that in now, get an early tax refund, then take the money out any time for their first home deposit.
With all these options it is important to get advice to remain within the rules. Financial planners can help.
This is general advice and should not be treated as personal advice. Russell Tym is an authorised representative of MoneyLink Financial Planning Pty Ltd ASFL No: 247360.
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