As we approach the end of a tumultuous financial year, there are a number of tried and tested tips and strategies that may be valuable in assisting you with your short-term tax, and longer-term retirement position.

Despite the current financial environment and affects of the Budget09, these strategies continue to offer the same tax concessions.

Government superannuation co-contribution

If your income is less than $60,342 for the 2008/09 financial year, and you meet other eligibility criteria, you may be eligible to receive a government superannuation co-contribution of up to $1,500 simply by making a non-concessional personal superannuation contribution of up to $1,000 before 30 June 2009. This means depositing $1,000 of your own after tax money to your super fund…and don’t forget you have to lodge your tax return to get the entitlement.

Now, there are not too many strategies that deliver a 150% government guaranteed return!

Spouse superannuation contributions

If your spouse’s income is less than $13,800 for the 2008/09 financial year, you may consider making a contribution into your spouse’s superannuation fund before 30 June 2009.

The short-term benefit of making such a spouse contribution is a tax rebate of up to 18% on the amount contributed, up to a maximum of $540, in your own personal income tax return.

For example, John currently earns $70,000. His wife, Faye is unemployed and performs home duties as a mother of three. She earns $5,000 from interest and share investments. If John were to make a $3,000 spouse superannuation contribution into Faye’s superannuation account, he would be eligible for a $540 tax offset in his own income tax return.

Note: In some cases, it may in fact be possible to benefit from both the Government superannuation co-contribution and a spouse superannuation contribution tax offset!

Tax deductible personal superannuation contributions

If you are self-employed and make a superannuation contribution before 30 June 2009, you may be eligible to claim a tax deduction in respect of those contributions. This may assist you with reducing your tax liability for the 2008/09 financial year.

Where you meet certain eligibility criteria, this ability to make tax deductible superannuation contributions may also be available to you if you are now retired or if you have substantial levels of passive income, for example dividends, rental income, or capital gains.

Crystallise a capital loss

If during the financial year you have made a capital gain, you will most likely be required to pay tax on this gain, despite the fact that you may also be holding onto significant capital losses.

In order to reduce or even eliminate the capital gains tax payable, you may benefit from turning some of those paper losses into real losses (where appropriate). However, this would involve disposing of those assets showing a current capital loss.

Pre-pay interest expenses

If you have borrowed money to take out an investment (eg shares), then despite the fact that the value of your geared investments are likely to have fallen, the interest on your borrowed funds will still need to be paid.

The good news is that the interest remains a tax-deductible expense, and by prepaying your interest expense, this tax deduction can be brought forward into the current financial year.

By Jeremy Gillman-Wells, Financial Planner, Bentham Financial Group 

Jeremy Gillman-Wells is an Authorised Representatives of AMP Financial Planning Pty Limited   | ABN 89 051 208 327 | AFS Licence No 232706. In order to get the latest newsletter, click here.


Other articles in this week’s newsletter

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18 Share Tips

Tried and tested tax & retirement strategies

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Important information

The information in this article does not take into account your objectives, financial situation or needs. Therefore, before acting on the information, you should consider its appropriateness to your personal circumstances. Although this information was obtained from sources considered to be reliable, it is not guaranteed to be accurate or complete. The information is current as at 13 May 2009 and may change over time.