For many of us, the period just before the end of the financial year can be an important time to look at finances.
Taking stock at this time is a great way to check in on your situation and see if any changes are needed in the lead up to 30 June.
For example, it may be a good idea to review your existing (and expected) concessional contributions to superannuation for the 2021-22 financial year—to see if you are making the most of the annual concessional contributions cap limit.
Below we’ve included a list of some key EOFY considerations to bear in mind. While these strategies may help reduce your personal income tax and/or provide for your retirement, their suitability will depend on your own eligibility and circumstances. As always, it’s important to seek qualified professional advice before making any changes to your finances.
Capital gains and losses
Depending on your circumstances, looking at your capital gains and losses could help reduce your personal income tax, for example:
- deferring the sale of an asset with an expected capital gain (and applicable capital gains tax liability) to a future financial year
- deferring the sale of an asset with an expected capital gain until it has been held for 12 months or more
- offsetting a crystalised capital gain with an existing capital loss (carried forward or otherwise) or selling an asset sitting at a loss.
Please note: While the above considerations take a tax-planning perspective, decisions of this nature should also be consistent with your overall investment strategy.
Deductible interest and expenses
Depending on your circumstances, increasing your deductible interest and expenses could help you reduce your income tax, for example:
- prepaying deductible interest, such as interest payments on investment loans for things such as property or shares
- bringing forward deductible expenses, such as income protection insurance premiums, donations to deductible gift recipient organisations, repairs/maintenance to investment properties, and work-related expenses.
Please note: The above could also be relevant when, for example, you expect your income will be lower in future financial years when compared to this financial year.
Private health insurance
Depending on your circumstances, look at your private health insurance status, for example:
- purchasing private health insurance could reduce your Medicare Levy Surcharge for the period of cover. Your insurer may offer an age-based discount, or you could avoid (or reduce) the impact of the lifetime health insurance cover loading.
Superannuation
Depending on your circumstances, look at your superannuation and consider, for example:
- making concessional contributions (and potentially using the carry-forward provision if your 30 June 2021 total super balance was below $500,000). Doing so could help to reduce your personal income tax and provide for your retirement
- making non-concessional contributions (and potentially using the bring-forward rule). Doing so could help to provide for your retirement—and you may be eligible for the Government co-contribution (up to $500).
Please note: The above could also be relevant when using the First Home Super Saver Scheme
Depending on your circumstances, look at your spouse’s superannuation and consider, for example:
- splitting up to 85% of your concessional contributions for the previous financial year with your spouse
- making non-concessional contributions for your spouse. Doing so could help to provide for your spouse’s retirement—and you may be eligible for the spouse contribution tax offset (up to $540).
Please note: The above could also help you fully utilise your combined transfer balance cap limits.
Moving forward
Just before the end of the financial year can be an opportune time to review your finances and plan for the year ahead—and by doing so, you’ll see if any further actions are required prior to 30 June.
Importantly, while the above list of EOFY considerations could be helpful with respect to several areas of your finances, please consider seeking qualified professional advice for a proper assessment of their suitability.
For more information about this topic, contact Carrick Aland’s Wealth Planning team on 1300 466 998 or visit carrickaland.com.au/wealth-planning/.
Disclaimer: This has been prepared by the IOOF Research team for Millennium3 Financial Services Pty Ltd ABN 61 094 529 987, AFSL 244252. Millennium3 Financial Services Pty Ltd is a company within the IOOF group of companies consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. This report is current as at the date of issue but may be superseded by future publications. The information in the report may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of Millennium3 Financial Services Pty Ltd. This report may be used on the express condition that you have obtained a copy of the Millennium3 Financial Services Pty Ltd Financial Services Guide (FSG) from the website. Millennium3 Financial Services Pty Ltd and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities or other financial products referred to in this report, or may provide services to the companies referred to in this report. This report is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of Millennium3 Financial Services Pty Ltd. Millennium3 Financial Services Pty Ltd and associated persons (including persons from whom information in this report is sourced) may do business or seek to do business with companies covered in its research reports. As a result, investors should be aware that the firms or other such persons may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision. This report has been prepared in good faith and with reasonable care. Neither Millennium3 Financial Services Pty Ltd nor any other person makes any representation or warranty, express or implied, as to the accuracy, reliability, reasonableness or completeness of the contents of this document (including any projections, forecasts, estimates, prospects and returns and any omissions from this document). To the maximum extent permitted by law Millennium3 Financial Services Pty Ltd, its related bodies corporate and their respective officers, employees, representatives and associates disclaim and exclude all liability for any loss or damage (whether foreseeable or not foreseeable) suffered or incurred by any person acting on any information (including any projections, forecasts, estimates, prospects and returns) provided in, or omitted from this report. General Advice Disclaimer: The information in this report is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this report, you should assess your own circumstances or seek advice from a financial adviser. Where applicable, you should obtain and consider a copy of the Product Disclosure Statement, prospectus or other disclosure material relevant to the financial product before you acquire a financial product. It is important to note that investments may go up and down and past performance is not an indicator of future performance. For information regarding any potential conflicts of interest and analyst holdings; IOOF Research Team’s coverage criteria, methodology and spread of ratings; and summary information about the qualifications and experience of the IOOF Research Team visit https://www.ioof.com.au/adviser/investment_funds/ioof_advice_research_process.
