Preparing early can save you stress at tax time.
1. Top up your super
Every little bit you add to your super will make a big difference down the track thanks to its concessional tax and the effect of compounding interest. So it could make sense to contribute more than the Super Guarantee amount that your employer pays into your super each year.
Check out this video for more on the power of compound interest.
There are two types of contributions you can make:
Concessional contributions (before-tax contributions made to your super) include:
• your Super Guarantee employer contributions
• additional money that you add to your super, known as salary sacrifice
• tax-deductible personal contributions (if you’re self-employed).These have been capped at $30,000 for the 2015 financial year when you’re under 49, with additional tax applying if you exceed your cap.
Non-concessional contributions (any money you contribute that you’ve already paid tax on) such as:
• money from your take-home pay
• money from the sale of an asset or an inheritance.
In 2014-15, non-concessional contributions are capped at $180,000, but as you’re under 65 you may be able to use three years’ worth at once and contribute $540,000. Contributions in excess of this cap may be subject to additional tax of 49%.
Before you make additional contributions to your super, speak to SALA first to ensure this strategy is right for you.
2. Contribute to your spouse’s fund
If your spouse is a low-income earner, why not contribute to their super before the end of the financial year and get a potential tax offset? If your spouse earns under $13,800 a year, by contributing more than $3,000 in their super before June 30 you may be able to claim a tax offset of up to $540.
3. Set up a new budget
Maybe you’re finding it hard to pay off the mortgage, or relying too heavily on credit cards. Or perhaps you’re just not sure where the money’s going. Whatever your financial situation, a budget can help you get in control, or get a clear picture of where you stand financially, so you can get into the best possible financial position for the next financial year.
Forget spread sheets, lines and rulers, try using this free budgeting tool from ASIC’s MonetSmart and simply print your results when finished.
We’re here to help. If tax time is a stressful time for you, we can help you get organised and structure your finances to improve your tax position before June 30.
Article sourced via © Colonial First State