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Tax Planning Strategies for Individuals

At BlueRock, we get on the front foot and utilise tax planning strategies that minimise tax losses and maximise wealth, all while playing by the rule book.

With 30 June fast approaching, it’s time to get moving on your tax lodgement. Some of you might leave it to the last minute and then throw a box full of receipts to your accountant! But at BlueRock we like to get on the front foot and utilise tax planning strategies ahead of time that minimise tax losses and maximise wealth, all while playing by the rule book.

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

The ATO has extended the 80 cents per hour working from home tax deduction until 30 June 2022. The shortcut method covers all eligible home expenses such as mobile phone or internet costs concurrently. If the method doesn’t accurately represent your costs incurred working from home, you can continue to use the old method of 52 cents per hour, while still being able to claim other applicable home office expenses.

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 FY22, get in touch with one of our accountants now

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