- Prepay for Stuff
- Offset Gains Against Losses
- Put That EOFY Bonus into Super
End of financial year is a time for reflection, planning and staring at your eligible deductions hoping you can find something else to sneak in there. Don’t worry, we’ve got you covered; today we are going to reveal the sneakiest tax deductions you can make without breaking the law.
Prepay for Stuff
Deductions are often about when you pay, rather than when you use the thing you paid for. So, if you have some large costs on the horizon, it may be wise to pay now and get them on this year’s books rather than paying after the end of the financial year and having to wait another 12 months before you can benefit from the deduction.
Stuff like magazine subscriptions, memberships and annual payments are some of the most obvious expenses, and if you are thinking about annualising payments, rather than having monthly outgoings, this is the time to do it.
Offset Gains Against Losses
Accountants like to sound clever. In fact, most of us like to sound clever and this could be your opportunity. When your friend says to you, “hey friend, what’s a really good way to reduce my tax bill? I’ve made loads of money through investments this year?”
You can say, “Good question, and thanks for asking. How about offsetting some of those gains against any losses you may have experienced? For example, if you sold one investment property for a profit, and another for a loss then you could offset the profit against the loss.”
The lesson is to use the word “offset,” as many times as possible and to keep that friend close; they’ll probably buy you things.
Put That EOFY Bonus into Super
Aren’t bosses great? They love sharing the spoils with their long-suffering employees, thus allowing everyone to bask in the glory of another successful year. The only problem is all the tax you have to pay on your additional earnings.
Too much money is such a burden.
So when your boss comes up to you and says that she want to pay you an additional $25,000 as a bonus, you can consider putting it into your super as a separate contribution. That way, as long as the amount is $25,000 or less and as long as it’s paid by the 30th of June, you won’t be smashed with crazy tax implications.
Importantly, none of us is smarter than the Australian Tax Office. They have spun their black magic over many decades, learning from their mistakes and taking note of loopholes that allow for additional deductions and quickly rectifying them. Don’t try and be clever with the ATO, because they are already ten steps ahead of you. Examples of people trying to be clever and getting caught, include a trades person claiming for the transport of tools, when they could have been left at work (which makes it a choice) and an engineer trying to claim for flights between Sydney and Perth…for a wedding.
POP has been designed to help you understand what you are eligible to claim by bench marking other, similar people in your industry. This enables you to have a tax return that doesn’t have unusually large deductions, something the ATO gets curious about.
You will need to consider your personal situation considering the above actions. Please ask your expert to provide you with further information before deciding what to do.