To help you complete your tax return, this checklist outlines income and expenses you need to disclose to the Australian Taxation Office (ATO) when lodging your return.
We’ve also provided an overview of the types of tax off sets and deductions you may be entitled to claim plus other handy tax tips and fact sheets.
Tax off sets and deductions
You may be entitled to the following tax off sets (rebates) and deductions for the year ended 30 June 2019.
Private health insurance off set
Depending on your income and age, you may be eligible for a tax off set of up to 33.4% on your health insurance. If you haven’t claimed a reduced premium from your health fund, then you can claim an off set in your tax return.
Spouse super contribution off set
If you made personal superannuation contributions on behalf of a spouse, there is a tax off set of up to $540 per year. This is available for spouse contributions of up to $3,000 per year, where your spouse earns less than $37,000 per year, and a partial tax off set for spousal income up to $40,000 per year.
Net medical expenses tax off set
You may be eligible for this tax off set until 30 June 2019, if you have out-of-pocket medical expenses relating to disability aids, attendant care or aged care.
Senior Australians pensioner tax off set
If you are eligible for the senior Australians pensioner tax off set (SAPTO) you are able to earn more income before you have to pay tax and the Medicare levy. In the 2018/19 financial year, you will pay no tax on an annual income less than:
• singles – $32,915
• couples (each) – $29,609.
Super tax hints
Superannuation is a very tax-effective vehicle to save for retirement. Following are some tips to help you maximise your super.
Contribution limits For the 2018/19 financial year the maximum non-concessional (or after-tax) super contributions are capped at $100,000 per person per year or up to $300,000 over three years using the bring-forward provisions. The ability to make non-concessional contributions and take advantage of the three year bring forward provision is subject to your total super balance at 30 June the previous financial year, your age and whether you have satisfied the work test (if between ages 65–74).
Concessional contributions, or those made with pre-tax money, are limited to $25,000 per person per year. Please note voluntary concessional contributions such as salary sacrifice or personal deductible contributions are subject to age restrictions and the ‘work test’ (if between ages 65–74).
A salary sacrifice strategy allows you to make contributions to super from your pre-tax salary. Your salary is then reduced by the amount you choose to sacrifice. The benefits of this are two-fold: not only does your super balance increase, but this strategy could also reduce your taxable income and therefore the amount of tax you pay. Also, super contributions are concessionally taxed at just 15% (up to 30% for individuals with income over $250,000) instead of your marginal tax rate, which could be as high as 47%. Read the facts.
Personal deductible contributions
From 1 July 2017, if you are eligible to contribute to super, you may make voluntary personal contributions and claim a tax deduction up to your concessional contribution cap. This gives you greater flexibility to top up your concessional contributions made by your employer, especially if your employer does not offer salary sacrifice. For instance, you can time your final contributions leading up to 30 June each year and make the most of your concessional contribution limits and the resulting tax benefits. Read the facts here
If you receive at least 10% of your income from employment or self-employment and you earn less than $37,697, you may be eligible for the maximum super co-contribution of $500 from the Government for an after-tax contribution to super of $1,000. The co-contribution phases out once you earn $52,697 or more. The ATO uses information on your income tax return and contribution information from your super fund to determine your eligibility. Read the fact Sheet
If you want to split your super contributions with your spouse, don’t forget this usually can only be done in the year after the contributions were made. Therefore, from 1 July 2019, you may be able to split up to 85% of any concessional (or pre-tax) contributions you made during the 2018/19 fi nancial year with your spouse. Apart from making the most of your super, there are other ways you can minimise your tax liability.
Capital gains and losses
A capital gain arising from the sale of an investment property or shares and capital losses can be used to off set the capital gains. For example, you may have sold investments that were no longer appropriate for your circumstances and any capital losses realised as a result can be off set against any capital gains you have realised throughout the year. Unused losses can be carried forward to off set capital gains in future years. Specialist advice should be sought before making changes to your investments.
If you have an investment loan you can arrange to prepay the interest on that loan up to 12 months and claim a tax deduction in the same year the interest was prepaid.
Negative gearing is another strategy used to manage tax liabilities. Geared investments use borrowed funds to enable a higher level of investment than would otherwise be possible. Negative gearing refers to the cost of borrowing exceeding the income generated by the investment. This excess cost can reduce the tax you pay on other income. If you invest in shares, you may obtain imputation credits which can be used to further reduce the amount of tax you pay.
Income protection insurance
If you hold an income protection policy in your name, then any premium payments you make are tax deductible.
Resident tax rates for 2018/19
Note: Medicare levy of 2% will also apply where applicable.
Individual tax rates for the year-ended 30 June 2019
Up to $18,200 Nil $18,201 to $37,000
19% of the portion over $18,200
$37,001 to $90,000 $3,572 + 32.5% of the portion over $37,000
$90,001 to $180,000 $20,797 + 37% of the portion over $90,000
Over $180,000 $54,097 + 45% of the portion over $180,000
This information is issued by Millennium3 Financial Services Pty Ltd (M3) ABN 61 094 529 987, which holds Australian Financial Services Licence Number 244252 and is a summary of M3’s understanding of current legislation. M3 is a company within the IOOF Group of companies, consisting of IOOF Holdings Limited ABN 49 100 103 722 and its related bodies corporate. The changes are subject to the passing of legislation and, accordingly, may not become law or may change. Please note that the information is based on M3’s interpretation of the proposed changes as at the date of issue of this document. Accordingly, you must not do or refrain from doing anything in reliance on this information without obtaining suitable professional advice. In addition, the information is of a general nature and may not be relevant to your/your client’s individual circumstances. Before making any investment decision you must consider the relevant PDS, available on request by calling M3. This information does not consider your personal circumstances and is general advice only. You should not act on any recommendation without obtaining professional financial advice specific to your circumstances. If you wish to opt out of future communications, please contact us.