When it comes to maximising your annual tax return, there’s usually a lot to consider. At Tanti Financial Services, we’ve been helping families in Penrith and the broader Western Sydney region navigate their financial journey for over 30 years. This year, we’ve identified several key opportunities that could help you save on tax – but the secret is planning ahead.
As a family-operated business, we understand that every dollar counts. That’s why we’re sharing these strategies to help you make the most of your money before the financial year ends.
The Key to Success: Planning Ahead
The difference between a good tax outcome and a great one often comes down to timing. With the Australian Taxation Office (ATO) focusing heavily on certain areas this year, it’s more important than ever to get your tax planning right from the start.
The ATO continues to focus on three key areas that have been priorities in recent years: work-related expenses, rental property deductions, and record keeping. These remain important focus areas for the 2024-25 financial year. By understanding these ongoing priorities and planning accordingly, you can ensure your return is accurate and maximise your legitimate tax benefits.
Deductions – Lower Your Tax Liability
Pay Now for Some of Next Year’s Expenses
If you have spare cash available, paying for certain expenses before 30 June could mean you receive your tax benefit back from the ATO earlier. Expenses paid in July might leave you waiting more than 12 months for your return.
A popular strategy in this category is prepaying interest on an investment loan. However, it’s crucial to remember that not all expenses qualify for advance tax deductions. Only expenses that directly relate to earning your income can be claimed as tax deductions, so proper planning and professional advice are essential.
Cash Back for Insuring Your Income
You can claim the premiums you pay for income protection insurance as a tax deduction, but only the portion that covers loss of income. This is an often-overlooked deduction that could provide significant tax savings.
It’s important to note that you can only claim the portion of the premium that covers you for loss of salary or wages, not for any benefits of a capital nature. Premiums for other personal insurance cover such as life, total and permanent disability, or trauma insurance cannot be claimed. Also, you can’t claim deductions for premiums paid from your superannuation contributions if your policy is held within your super fund.
At Tanti Financial Services, our insurance specialists can help you structure your insurance to maximise these tax benefits while ensuring you have appropriate cover for your family’s needs.
Superannuation Contributions – Don’t Waste the Limits
June 30 isn’t just about expense deductions. It’s also an excellent time to review your superannuation contributions and take advantage of the annual caps, which have increased for 2024-25.
Salary Sacrifice or Concessional Contributions
The annual limit for tax-deductible contributions has increased to $30,000 per year for 2024-25, up from $27,500 in the previous financial year. This limit applies regardless of age and covers both employer superannuation guarantee and salary sacrifice contributions.
How much has your fund received in contributions so far this year? If you’re an employee, remember that your employer contributions count towards this cap. This is where our integrated approach at Tanti Financial Services really benefits our clients – our financial planning team can review your current arrangements and recommend adjustments if needed.
After-Tax Contributions
Anyone under 75 can contribute $120,000 each year to super as after-tax or non-concessional contributions, up from $110,000 in the previous year. You can also contribute $360,000 in a single year by bringing forward the limit for the following two years, provided you meet certain eligibility criteria.
However, there’s an important caveat – if your total super balance equals or exceeds the general transfer balance cap of $1.9 million at the end of the previous financial year, your non-concessional contributions cap becomes nil.
Timing Matters
Here’s a crucial point that many people miss: the total contributed is based on how much is received by your fund, not when you sent it to the fund. This is another reason why planning ahead is essential.
ATO Focus Areas for 2024-25
Understanding what the ATO continues to focus on can help you ensure your tax return is compliant while maximising your legitimate deductions. Based on recent years’ priorities, these areas remain important for the current financial year.
Work-Related Expenses
In 2023, more than 8 million people claimed work-related deductions, with around half claiming deductions related to working from home. The ATO updated the fixed-rate method for working from home deductions in recent years, and these requirements continue to apply for the 2024-25 financial year.
Remember the three golden rules for claiming work-related expenses:
- The expense must be personally incurred and not reimbursed
- It must directly relate to earning your income
- You must have a record (usually a receipt) to prove it
Rental Property Deductions
The ATO’s data shows 9 out of 10 rental property owners are getting their income tax returns wrong. Common mistakes include incorrectly claiming repairs as immediate deductions when they should be capitalised, and not properly apportioning interest expenses when part of a loan is used for private purposes.
Record Keeping
Comprehensive record keeping is more important than ever. The ATO has sophisticated data-matching capabilities and is using them to identify discrepancies. Whether it’s maintaining spreadsheets to track working from home hours or keeping detailed records of rental property expenses, good record keeping will save you time and stress.
Don’t Leave It Too Late
These strategies are just a few ways to optimise how your money is taxed. Depending on your circumstances, other options may be available. However, effective tax planning requires time to implement properly.
At Tanti Financial Services, we take pride in our comprehensive approach. Our Penrith-based accounting services work hand-in-hand with our financial planning, mortgage broking, and insurance services to ensure you’re maximising every opportunity. We’re not just your accountants – we’re your financial family, committed to helping you achieve your long-term goals.
Take Action Now
The end of the financial year will be here before you know it. Don’t miss out on legitimate tax savings because you ran out of time. Our experienced team of registered tax agents and financial planners can help you:
- Review your current tax position
- Identify opportunities for tax-effective superannuation contributions
- Ensure your insurance structure is tax-optimised
- Prepare for the ATO’s focus areas
For more information about superannuation planning and contributions, visit the government’s Moneysmart website, which provides excellent tools and calculators to help you understand your options.
You can also access detailed information about tax planning and superannuation strategies through the Australian Taxation Office website.
Remember, everyone’s financial situation is unique. What works for one family may not be the best approach for another. That’s why personalised advice is so important.
Contact Tanti Financial Services on 1300 661 424 or visit us at our Emu Plains office. Let’s work together to ensure you’re ready for June 30 and positioned for a prosperous financial future. Because at Tanti Financial Services, your success is our success.