For ten weeks our focus had been on the virus, the lockdown, surviving, resuming work and returning to normal, to the exclusion of nearly everything else.
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Yet now we are also in EOFY season, the end of the financial year.
That means planning investments and superannuation contributions for maximum tax advantage. Financial strategies must be in place by 30th June, which is now just seven weeks away.
Anyone can make super contributions and claim a tax deduction for them up to a limit of $25,000 including employer contributions. The limit includes all super guarantee, salary sacrifice and personal deductible contributions.
People with savings in the bank who could use a tax deduction should consider a contribution. It will earn a tax refund or cut their bill and build their retirement savings. Older workers closer to retirement should try to maximise contributions each year until they retire.
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Non tax-deductible contributions up to $100,000 are also allowed. People close to retirement with savings should consider them as well. This is especially so for those over age 65 and still working as no further contributions can be made once they cease work.
Self-employed people without employer super guarantee support should arrange to make a significant contribution before June 30. If they don't they will fall behind their employee peers whose employers are contributing regularly for them.
The self-employed may feel they cannot afford to put money in super, that they have other priorities, but they really cannot afford not to put at least some money in. The turmoil created by the virus will make it more difficult but it is really important to do something.
There are other useful super strategies. A $3,000 contribution for a low-income spouse will earn the contributor a $540 cut off their tax bill. The full rebate is paid if the spouse's income is less than $38,564 this year.
The Government co-contribution scheme allows anyone who works at least part time and has income under $40,000 to earn an extra contribution to their super from the Government.
If they are under age 71 and put $1,000 into their super without claiming a deduction the Government will add $500 to it.
Taxpayers can also pre-pay expenses for next year and claim a tax deduction for them in this year. This includes interest on loans. So now is an ideal time to buy an investment property, shares or managed funds with borrowings.
Next year's interest can be paid in June with a deduction allowed in this year. The arrangement needs to be approved by the lender. Smart planning now can boost tax benefits for this year.
Russell Tym is an authorised representative of MoneyLink Financial Planning Pty Ltd ASFL No: 247360
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