WHILE you can't escape paying tax you have three weeks to reap the benefits of some effective tax planning.
H & R Block regional director Frank Brass said tax planning before June 30 can help many taxpayers improve their tax position.
"Many taxpayers want to tune out to the constant news around new tax rates, the new carbon tax, means testing of private health rebates, medical expense rebate thresholds and constant tinkering with superannuation rules," Mr Brass said
"However, using the next few weeks to act on some simple advice may vastly improve a taxpayer's overall position."
Here are H & R Block's strategies which must be completed by June 30 for maximum effect.
Defer taxable income
If your taxable income for 2013 will be under $80,000, deferring your taxable income would be a wise strategy as the tax free threshold for 2013 increases to $20,000.
To utilise this strategy of delaying income you need to check what income you are likely to receive in the last quarter of the financial year and, if appropriate, delay that income to the next financial year.
Important note for sole traders and partnerships:
There would be little point in deferring this income if it pushes you into a higher tax bracket next year which would result in more overall tax being paid.
Salary and wage earners
This is harder to do for this group, but if you are due a bonus, you may be able defer its payment.
Important note for companies:
Companies pay a flat rate of 30% on profits, so this does not apply.
Carry out any repairs to equipment and premises prior to June 30.
Repairs are deductible in the year they are carried out. Improvements and additions are generally depreciated.
Prepay expenses where possible
Rent, accounting fees, interest expenses, subscriptions. Be careful of the different prepayment rules that apply to different classes of taxpayers.
Good management of the trading stock will decrease your income for the year.
Do an advanced purchase of business consumables - A4 paper, toner cartridges, stationery items, etc.
Pre-payments do not apply.
Write off bad debts
You need to ensure your bad debt qualifies to be written off.
Superannuation deduction for self-employed business people.
You can claim 100% of the amount contributed provided.
You notify the fund of the contribution.
Receive a confirmation in writing from the trustee of the super fund.
A tax loss is not created.
Concessional (where you claim a tax deduction)
Under 50 years of age $25,000.
Over 50 years of age $50,000.
Non Concessional, no deduction allowable.
Under 65 years of age $150,000.
If you are 75 or over, you can only claim a deduction for contributions you made before the 28th day of the month following the month in which you turned 75.
If you are under 18 at the end of the income year, you can only claim a deduction for your personal super contributions if you earned income as an employee or a business operator during the income year in which you claim the deduction.
Contributions on behalf of spouse
This is subject to income limit of $13,800 for the spouse. A rebate of $540 is available to those who qualify.
A full rebate will apply if the assessable income, reportable superannuation contributions and reportable fringe benefits of the spouse is no more than $10,800.
A reduced offset will be available provided the spouse's income does not exceed $13,800.
Co-Contribution, where the government contributes as well
You will be eligible for the co-contribution if all of the following applies:
- You make a personal superannuation contribution by June 30 each year into a complying superannuation fund or RSA and don't claim a deduction for all of it and your total income (less any business deductions for the 2011-12) is lower than $61,920.
- 10% or more of your total income is from eligible employment or carrying on a business or a combination of both.
- You are less than 71 years old at the end of the year of income.
- You do not hold an eligible temporary resident visa at any time during the year (unless you are a New Zealand resident or holder of a prescribed visa).
- You lodge your income tax return for the relevant financial year.
How much will I receive?
The government will contribute to your superannuation fund $1 for every $1 you contribute; up to a maximum co-contribution of $1000 a year but the amount will reduce by 3.333 cents for every dollar your total income is over $31,920 and cuts out fully at an income of $61,920.