With the end of another Financial Year only two weeks away, it is important to consider how you can be proactive in maximising any benefits available.
I have included below three simple strategies to consider before the end of the Financial Year.
1. Defer income and accelerate deductions
The personal tax rates for low and middle-income earners are about to drop for the 2012/13 financial tax year which will enable those persons to save tax by either deferring assessable income or bringing forward deductions (e.g. prepaying interest on any investment loans).
These reduced tax rates will arise because the tax-free threshold will be more than tripled from $6,000 to $18,200 for the 2012/13 financial year. However, the benefits of the increased tax free threshold will be progressively reduced by increasing the current 15% marginal tax rate to 19% and the 30% marginal tax rate to 32.5% from 1 July.
When combined with changes to the low income tax offset it is anticipated that individuals can save up to $600 tax when they earn less than $20,000, $303 tax when they earn less than $65,000 and $3 tax when earning in excess of $80,000.
2. Consider the superannuation co-contribution
An individual likely to earn less than $61,920 in the 2011/12 Financial Year may wish to consider making after-tax contributions to their superannuation to qualify for the superannuation co-contribution.
The Government will match after-tax contributions dollar for dollar up to a maximum of $1,000 for a person earning up to $31,920. The maximum then reduces by 3.333 cents for every dollar of total income, less allowable business deductions, over $31,920 reducing to nil at $61,920.
3. Prepay private health insurance for 12 months
From 1 July, the 30% Government private health insurance rebate will be ‘means tested’. This impacts singles with income over $84,000, and families with income over $168,000. By prepaying your private health insurance for 12 months you can benefit from the 30% private health insurance rebate for an extra 12 months.
For more information please contact Ryan Love on 1300 856 338 or e-mail ryan.love@apexpartners.com.au.
This article is general information only and is not intended to be a recommendation. We strongly recommend you seek advice from your financial adviser as to whether this information is appropriate to your needs, financial situation and investment objectives.