The End of the Financial Year is almost upon us. And right now, before the 30th of June, is when you should be considering your strategies to trim your tax bill by minimising your assessable income, especially if you have an investment property loan. Although you should always seek advice from a professional financial services advisor or your accountant, here are a few areas that you may consider before 30 June 2014.
Investment property loan strategies
Do you own an investment property? You can claim expenses, such as body corporate fees, advertising for tenants, pest control, agent’s fees and some maintenance. Are there any repairs that need to be done… you may be able to use these as a deduction if you finish them before 30 June.
Pre-pay your investment property loan, another strategy is to prepay interest on an investment loan (you can do this for up to 12 months in advance). You can then claim the deductions against your income.
Other areas to consider
Your super is a long-term strategy. There isn’t a better time to look at this than pre 30 June. The most popular tax minimization option is to ‘salary sacrifice’. This is an arrangement employees have with their employer (or business owners arrange for themselves) where you can make further super payments from your pre-tax salary in lieu of take-home pay. This money is then taxed at a lower rate – 15%. For many people, this is a much lower tax rate than the tax rate on take-home pay. There are caps for the amount you can contribute so it is important to get expert advice.
If you run a business on your own, there might be claimable purchases that you’re perhaps not aware of. Besides the obvious mobile phone, vehicle expenses and marketing expenses, there are often deductions that are less well known. For example, do you need a uniform? Are you a tradesman and need a dog to protect your tools… you may be able to claim for the costs involved.
Make sure you’re maximising your deductions – ask your accountant for help.
If you have a spouse or partner who earns a low wage (or doesn’t work at all) and also have investments, it’s possible to minimize your combined tax bill by holding some investments in their name. You can’t split wages, but you can put income from investments into your partner’s return, which should be taxed at a lower than marginal rate.
Nobody likes to pay more tax than they have to. With careful planning and strategies, you should find the right balance, but those of us who have an investment property loan, there is far more to gain from a diligent approach to tax time.