Because super contributions are taxed at a concessional rate of 15% in Australia, this is a tax-effective plan. This is a lower rate than the personal income tax.

Maximizing your voluntary superannuation contributions is a permitted tax deduction that can also be a substantial long-term wealth growth strategy. You can currently claim a tax deduction of up to $25,000 each year.

This is known as the concessional contributions cap.

Unused concessional cap carry forward

You may be able to contribute the unused amounts of your concessional contributions cap for a maximum of 5 years starting July 1, 2018.

For example, if you did not make any superannuation contributions in FY 2018, FY 2019, or FY 2020, you may be eligible to make $100,000 in deductible super contributions in FY 2021. For the fiscal year 2021, this might save $47,000 in taxes.

Salary packaging in a charity

If you work for a charity that is exempt from FBT, you can save money by having $15,900 of your living expenses reimbursed tax-free. These expenses include things like:

• Rental payments
• Mortgage payments
• Credit card payments
• General living expenses
• Utility bills or rates notices

Instant asset write-off and allowances

Eligible businesses can claim an instant deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use. The instant asset write-off threshold amount for each asset is $150,000 (up from $30,000) for assets first used or installed ready for use between 12 March 2020 and 30 June 2021, and purchased by 31 December 2020. For further information, consult your tax accountant, as there are other conditions that must be met.

Claim for property depreciation

Most income-producing properties are eligible for some form of depreciation. Property investors can claim a capital works deduction as well as depreciation on their plant and equipment.

Use a quantity surveyor

Quantity surveyors can assist in the preparation of a depreciation schedule in order to maximise an investor’s depreciation claim. This report’s preparation costs are also tax deductible.

Did you know there is an unintended ‘Death Tax’ in Australia?

The dependants of a deceased member receive tax-free super benefits when the person dies. Many members, on the other hand, do not have dependants and are often survived by adult children who do not receive tax-free payouts. The taxable portion of a lump-sum super death payout is normally taxed at a rate of 15%.

Members might consider utilising a re-contribution scheme, keeping a separate pension, or even pulling down on their super before they die to reduce the risk of their surviving adult children paying the “death tax.” In the event of incapacity, this involves having specific instructions in the will and any Power of Attorney.

Use your Franking Credits reasonably to reduce taxes

Franking credits can help you save money on your taxes. This is accomplished by utilising the tax paid by the corporation, which is then passed on to the shareholder in the form of a Franked Dividend. Franking credits can be used to lower the amount of income tax paid on dividends, or they can be used to get a tax refund.

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.