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June 2020 Year End Tax Planning for Individuals

Article By Adam Camac | | Financial Planning

As 30 June approaches now is the time to review your options that can assist with savings to your tax.

We encourage you to contact your Altitude Adviser to discuss what would be appropriate in your circumstances. It is important to note, no Federal Budget will be released until October 2020 (this is normally held in May prior to end of financial year).

Firstly, you need to be aware of the level of your taxable income and resulting tax payable prior to the consideration of any of these strategies.

A brief over of the pre-30 June principle strategies include:

  1. Superannuation contributions –Tax deductible
    > Make up to maximum tax-deductible superannuation contributions of $25,000.
    > You can use carry forward amounts from the 2019 financial year if you contributed less than $25,000 last year and your super balance was below $500,000. This is in addition to the $25,000 for the 2020 financial year.
  2. Superannuation contributions – Non-Tax deductible
    Use of the Government co-contribution which is a maximum of $500 if your contribution is $1,000 or greater and your income is lower than $38,564.
    An annual contribution of $100,000 can be made. If you are getting close to retirement, the bring forward rule allows a maximum of $300,000 to be made.
    Consider downsizing contribution that can be made if you sell your house prior to retirement.
  3. Retirement pension
    Super balances paying pensions are very advantageous as no tax is paid when the Superfund is in pension phase. It may be worthwhile to pay pensions as soon as possible to gain a substantial tax savings.
    It is important to withdraw the minimum pension to ensure the “tax free” status of your account is maintained.
    For this and the next financial year the minimum withdrawal is halved. It may be in your interest to reduce the amount being taken to keep more money in your Superfund.
  4. Capital Gains
    If you have made any capital gains this financial year you may want to consider any potential unrealised investment losses that can be used to offset the gains. It is important to note that losses must be applied to any gains prior to any calculation of the 50% capital gains discount.
  5. Buying insurance or bringing forward tax deductable expenses/interest payments
    This strategy is based on the reduction of your taxable income from year to year. If you have a larger income this year it may be advantageous to bring forward expenses in this financial year. This can include insurance expenses related to income protection or business profits, or pre-payments of interest on investment loans.
  6. Family Trusts
    The tax effective distributions for trusts taking into account the opportunity to distribute capital gains and/or franking credits to particular beneficiaries should be considered and accommodated prior to 30 June.
    Your estate planning should be covered as part of your year and tax planning.

For more information and advice please contact your Altitude Adviser.

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