Year end tax tips 2010 - Personal tax

With the end of the financial year rapidly approaching we provide below a list of things you might consider to reduce your tax bill.

Also see our tips for business

Consider your superannuation contributions

If you are self-employed or do not have employer superannuation support, a very effective way to reduce your tax liability is to make a deductible contribution into your super before 30 June 2010. There are limits and rules associated with these contributions, but we would be pleased to advise you on how they affect you.

Tax deductible donations

If you were considering donating to tax deductible organisations in the coming months you may wish to bring the donation forward to before 30 June. This will enable you to claim the tax deduction in this year’s tax return. We recommend ensuring the receipt from the organisation is made out to the higher income earner in the family to maximise the tax effectiveness of the donation.

Keeping records

Remember to keep your tax records in a safe, central place. Over the coming months, as statements come in, collate your tax information and summarise it before sending it to Saward Dawson. This will assist in capturing everything and will help to keep your accounting fees down.

Capital gains/losses

If you have made significant capital gains in the 2010 year you may want to review your investment portfolio. Consider if there are any assets you may want to offload prior to 30 June to create a capital loss. If a capital loss is made in the same year as a capital gain they can offset each other.

If you are about to make a large capital gain from selling an asset, consider deferring the signing of the contract of sale until after 1 July 2010. In this way, you will defer the tax payable.

Pre-paying interest

If you have a tax deductible debt, i.e. a loan that was acquired to fund an investment, consider pre-paying interest to bring forward the tax deduction into the 2010 financial year. You will need to speak to your bank to determine if you have a loan that enables this type of arrangement.

Work-related or rental property items

Work related items costing less than $300 can be claimed in full. Items costing more, such as a laptop, must be claimed over a number of years. Consider purchasing minor work-related items prior to 30 June to maximise your deductions this year.

Repairs/painting to a rental property could be brought forward to June. Again, these types of expenses can be claimed in full in the year you are invoiced.

Motor vehicle claims

If travelling for work more, consider starting a log book prior to 30 June for a 12 week period. This will enable you to use the log book method to claim motor vehicle expenses, which may be a higher claim than other methods.

Published : 2 June 2010