Beyond ensuring your tax return aligns with the ATO’s requirements, the lead-up to EOFY is an excellent opportunity to conduct a personal finance health check and review your EOFY tax planning strategies. Early tax planning often results in significant financial benefits. Here are several strategies to minimise your tax bill before year-end:
If you have funds available, consider paying next year’s deductible expenses early, such as work-related costs or interest on investment loans. Doing this can bring forward your tax deduction, potentially increasing your refund this financial year. Common examples include tools for trades or educational expenses for teachers.
According to the ATO, prepaid expenses may be immediately deductible if they fall under excluded expenditure (less than $1,000) or meet the 12-month rule (expenses covering no more than 12 months and ending in the next financial year). Consult your accountant to clarify which deductions you can bring forward.
Adjusting the timing of asset sales can significantly affect your tax bill. For instance, assets such as shares or property held for at least 12 months qualify for a 50 per cent capital gains discount. Selling shares during a financial year when your other income is lower could further reduce your capital gains tax (CGT) liability.
Reducing your tax liability should fit within your overall investment strategy rather than being the only factor.
You can also strategically use previous years’ capital losses. Unlike profits from asset sales—which incur CGT in the year of sale—losses can offset future capital gains. For example, losses from shares sold last year can lower capital gains from asset sales this year.
Typically, personal insurance premiums aren’t tax deductible unless they’re related to income protection. Income protection premiums often include total and permanent disability (TPD) or trauma cover. Request a breakdown from your insurer to identify any deductible portions.
You might also consider holding life and TPD cover within your super fund, as super funds can claim deductions for these premiums (with an Any Occupation claim definition). This arrangement can reduce your net insurance costs.
Reduce your taxable income by making personal deductible super contributions from your after-tax income and claiming a tax deduction. You must submit a Notice of Intent form to your super fund before lodging your tax return, before 30 June of the following financial year, or before withdrawing funds—whichever occurs first. These contributions attract the concessional tax rate, usually 15 per cent.
Keep in mind, deductible contributions count towards your concessional contributions cap. Exceeding the cap may trigger additional taxes when you lodge your return.
Under the government’s ‘catch-up’ scheme, unused concessional cap amounts can be carried forward for up to five years, provided you haven’t used the full general cap (currently $27,500) previously. Eligibility requires your total super balance to be below $500,000 on 30 June of the previous financial year.
Non-concessional contributions from after-tax pay can also be beneficial and may qualify you for a government co-contribution of up to $500, depending on your income.
If your spouse or de facto partner earns less than $40,000 per year, you could claim an 18 per cent tax offset on after-tax contributions you make to their super account. Currently, a maximum offset of $540 applies if your spouse earns under $37,000 and you contribute $3,000 to their super. This strategy is particularly helpful if your spouse isn’t employed or works part-time, protecting against shortfalls in their retirement savings.
These strategies are just a few ways to potentially save on taxes. For personalised advice, consider consulting our Gild Wealth experts. Our Gild Tax Team can assist with ensuring everything is correctly lodged for you and your business. To maximise your tax savings, get in touch with us before the end of the financial year to start planning and organising your finances.
