2018 Financial YearATOAustralian Taxation OfficeDeductionsIncome IssuesIndividualsOffsetstax planning

Individuals – 2018 Tax Planning

End of Year Tax Planning

This article contains commentary on many of the items you may encounter as part of your end of financial year deliberations.

Individuals

Deductions

  • Superannuation Co-Contribution – the government will give lower income earners ($36,813 to $51,813) $0.50 for each $1 they contribute to superannuation from their after-tax salary up to a maximum of $500.
  • Taxation Advice – fees payable to an accountant or registered tax agent for taxation advice can be claimed.
  • Expense Substantiation – ensure that you can justify all employment-related expense amounts incurred.
  • Working From Home Expenses – expenses can be claimed for working from home (as distinct from having a home office).
  • Expenses For Shareholding Investments – expenses incurred in gaining income from shares are a tax deduction.
  • Personal Insurance Payments – premiums for Sickness and Accident Cover are tax deductible. Payments can be made by the employer without incurring Fringe Benefits Tax.
  • Home Office Expenses – if you use an area in your home, you can claim the expenses of a home office. Items that could be claimed include:
    • electricity (proportionate)
    • rent (proportionate)
    • cleaning (proportionate)
    • repairs and maintenance for the office
    • depreciation of fixtures and fitting and plant and equipment for the home office
  • Work-Related Expenses – items such as travel, uniforms, laundry of work clothes, subscriptions, union fees and self-education – but you must be able to substantiate your claim.
  • End of Year Tax Schemes – the ATO produces product rulings on various investment products that are marketed particularly around 30th June each year. To avoid confrontation with the ATO, it is best to consider investing in products that have obtained a product ruling.  These product rulings are not a guarantee or government endorsement on the likely success, or profitability, of the investment.
  • Managed Investment Schemes – it is recommended that you have a meeting with your professional accountant prior to committing to a Managed Investment Scheme (MIS) investment.

Income Issues

  • Interest Earned – declare interest earned on bank accounts, loans, etc.
  • Employee Share Schemes – if you are a member of an employee share scheme, you should ensure that any income earned is included in your income tax return.
  • Scheme Formed After 1 July 2015 – Employee Share Scheme interests provided by eligible start-up companies will not be subject to up front taxation if the investment is holed by the employee for at least three years. An eligible start-up company is one with aggregated turnover of less than $50M unlisted and incorporated for less than ten years.
  • Scheme Formed After 1st July 2009 – the discount on Employee Share Schemes are taxed either upfront or on a deferred basis. For ‘qualifying’ schemes, if the employee is earning less than $180,000 taxable income plus reportable fringe benefits, reportable superannuation contributions and total investment losses, then the employee can claim a $1,000 exemption from the inclusion of the assessable discount.
  • Dividends, Interest, Managed Funds Distributions, etc. – the ATO matches information provided in tax returns with information received from external sources, such as public companies, banks, managed funds etc…………………………

Offsets

  • Zone Offset – This offset is based upon where you are considered to reside for the tax year, so your Zone Tax Offset is limited to where your main residence or home is considered to be.
  • Salary Packaging – salary packaging can assist in the minimisation of income tax, particularly in the areas of voluntary superannuation contributions and acquisition of assets that are not subject to Fringe Benefit Tax. Your employer is required to report the value of fringe benefits in your payment summary.  That may have an effect on other government payments you receive.

This article does not include any of the items contained in the Australian government’s Budget for 2018/19 as the Budget has not yet been approved by Parliament.

Please do not hesitate to contact us if you would like to discuss any items with us.

 

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.