Tax Planning for Individuals

Ideas for Tax planning for Individuals

It is important that you ensure you have the correct claims for 2024 to maximise your allowable deductions and minimise your tax payable.  Some of these strategies are:

Superannuation Contributions

There are a number of possible strategies using superannuation as a strategy to minimise tax.  These are shown below:

Utilising your personal concessional cap of $27,500

A contribution could be made to your superannuation fund up to this cap before 30^th June by either salary sacrificing your salary or making a personal contribution.  You need to be careful to consider all employer superannuation guarantee contributions being made for the year so that you do not exceed $27,500.

Warning – if your total income and superannuation contributions exceed $250,000 you may be required to pay an additional 15% tax on the contributions.

Carried Forward Contributions

This strategy allows people who have less than $500,000 in superannuation to make additional contributions into superannuation for any unutilized contributions for the past 5 years.  For the last 5 years, the total maximum contribution you could make is $132,500, depending on how much of each prior year allowable cap you have already used.

Spouse Super Contributions

You may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that are made on behalf of your spouse, provided that your spouse’s income is less than $37,000.

Government Co-Contribution

If your income is less than $43,445 and you contribute $1,000 to superannuation but do not claim a deduction for it (non-concessional contribution), you may be eligible for a government co-contribution of up to $500.

Home Office Expenses

If you work from home, you may be eligible to claim a deduction for home office expenses.

There are two methods that can be used to claim a tax deduction, shown below.  The ‘actual costs’ method is very difficult to calculate, as it requires the consideration of the energy rating of your home heating and cooling appliances.  Generally it is much easier to claim using the Fixed Rate method.

1. Fixed rate method – an amount of $0.67/work hour can be claimed. This covers cost such as electricity, telephone, internet, stationary and computer consumables.  It is important to have records to verify the hours spent working from home eg a diary.
2. Actual costs method – this requires you to keep all invoices and receipts of expenses for the full year.

Motor Vehicle Expenses

If you are required to travel for work purposes, there are 2 methods to claim the running costs of a vehicle:

1. Cents per km method – this allows a claim of up to 5,000 kms at a rate of 85 cents per/km. While no receipts need to be kept to claim this method, a diary should be maintained to substantiate the kilometres travelled.
2. Log Book method – this method requires all receipts and invoices to be kept for the full year. A Log Book detailing each trip in your vehicle including whether the trip is for personal or work related travel, must be maintained for a period of 12 weeks at least once every 5 years to verify the business use percentage of the vehicle.

Work Related Expenses

Keep any receipts or invoices you have for any expenses you were required to pay during the year that relate to your employment.  Eg registrations, uniforms, or training.  If you are unsure, keep a record of these expenses and we can assist when we prepare your tax returns as to whether a deduction is possible.

Donations to Registered Charities

Keep any receipts for payments made to registered charities.

Prepay any expenses and interest

With a change in the tax rates next financial year, a greater tax deduction can be gained in the 2024 financial year.  Therefore, it may be possible prepay some expenses in June 2024 such as investment related expenses.  It may be possible to prepay up to 12 months of interest on a loan for a property or share investment and claim a tax deduction this financial year.  Also consider prepaying other expenses such as any membership/subscriptions, and undertake any property repairs in the current financial year.

Please contact our office if you have any questions in relation to the above opportunities and how they may impact you.