Here are a few tax planning strategies that your accountant will be considering when working on your individual tax return. If you’re across these things, it will make it so much easier on you…and your accountant!
Personal Tax Planning Strategies to Consider
Personal tax income (or individual tax income) is based on your wages, salaries, and any other form or income such as capital gains from cryptocurrency or stocks. Keeping the following tips in mind will enable you to firstly, know what to expect in terms of declaring income that you haven’t already paid tax on; and secondly, maximise your tax return so you can claim back more of your hard-earned money.
Timing Income Before or After June 30
Delaying or declaring any income after June 30 will mean you pay the tax on it in the next financial year. Consider the timing of these income streams to decide what works best for you:
- Bonuses
- Franked dividends from private companies
- Capital gains events (selling an asset that results in a capital gain or loss)
- Cryptocurrency
Including Working From Home Expenses
On 1 July 2022, the ATO scrapped the WFH shortcut method of 80 cents per hour and replaced it with the revised fixed-rate method of 67 cents per hour. The revised method includes internet, mobile, home phone, stationary and computer consumables, plus energy expenses related to WFH. But, record keeping requirements have been beefed up. If the method doesn’t accurately represent your costs incurred working from home, maybe it's time to familiarise yourself with the actual cost method again.
Despite the importance of your coffee, snacks and UberEats consumption in creating a kick-ass spreadsheet or presso while working from home, they are ineligible as office expenses!
Other Tax Considerations
- Salary packaging and salary sacrifice arrangements are an effective way to reduce your taxable income. These might include additional superannuation contributions, healthcare, living away from home expenses, or a salary sacrifice car.
- If you have Income Protection Insurance , the premiums paid are usually tax deductible.
- You can claim a deduction for self-education expenses if the education relates to your current work situation or if you receive a taxable bonded scholarship.
- Donations to a registered charity, public ancillary fund or private ancillary fund are tax deductible. So remember to ask for a tax receipt.Keep in mind that ‘go fund me’ donations are only deductible if it was made to a registered charity.
Voluntary Superannuation Contributions
If eligible you could benefit from a personal tax deduction by making a personal concessional contribution to super before 30 June via:
- The Concessional contributions cap is $27,500 or
- Catch-up contributions from unused prior year caps.
Please note that we recommend you speak with your financial advisor prior to making any contributions to superannuation.
Personal Services Income
If you are in a personal services industry such as a medical profession, graphic design or IT consultancy, your income earned is derived from personal skills. These incomes are deemed as Personal Services Income (PSI). The ATO defines PSI as income derived by the personal efforts or skills of an individual.
The ATO looks through any trading structures such as trusts or companies to attribute any PSI earned by an individual from their personal efforts to the individual themselves. Therefore it’s important to ensure that any profits earned when operating via a trust or company are appropriately paid out to you before 30 June 2022.
Get the Support You Need to Grow Your Personal Wealth
No matter what your individual circumstances are, there are different tax strategies to consider to make the most of your tax return. Whether that relates to your superannuation, personal services income or SMSF, BlueRock's business advisors can help make tax time less of a burden for you.
If you’re ready to maximise your personal income tax for FY23, get in touch with one of our accountants now.
