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What you need to do before June 30

10 May 2021

 

 

 

 

Some quick win tactics and long-term strategies for tax efficiency

With the end of financial year only a few weeks away, there is still time to implement some quick win tactics to optimise your taxation strategy.

In this article Jacki Tulloch, senior private wealth advisor at ANZ shares a number of short-term steps that you can take before the financial year closes.

“When it comes to planning and implementing effective tax strategies, investors have two main options: one is to go for the short-term tactics that they can do right now or just right before the financial year end. The second is the preferred view which is to take a long-term view to plan taxation strategies that deliver high-impact and compounding results,” Tulloch says.

There are still some things that you can implement right now if you haven’t done a lot of preparation or planning earlier in the financial year.

Let’s look at those quick wins and easy to take steps first.

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Superannuation

Contributing extra money to your super is an easy, tax effective strategy often overlooked by many. By putting more into super you can help build your retirement fund for the future. Currently, superannuation remains a highly tax effective long term savings platform.

Remember, if you’re under 67 years old, or aged 67-74 and meet the work test or work test exemption, you can contribute up to $25,000 via salary sacrifice or deductible personal contribution. From July 1 this year that amount will increase to $27,500. This can be a tax-deductible expense whilst building your superannuation nest egg. Just remember superannuation laws and limits can be complex so it's best you check your eligibility on the ATO website and seek professional advice.

Interest payments

Pre-paying interests on investment loans can be another easy to implement tax management tactic. If you have investment loans - whether margin loan or property investment loan – that attracts deductible interest, this may be the time to pay interests in advance. Interest prepaid on investment loans may be a tax deduction in the year paid.

Property expenses

Knowing what you can depreciate or not in your investment property could help reduce your tax bill. Consider the depreciation expenses and other deductible items that you may be able to claim for this year. Pre-paying interests on property loans can also be effective.

It goes without saying that it’s essential to make sure that you keep all the relevant receipts and documents for all your property repairs, replacements or renovation to make it easier to check and tally all deductions.

Insurance payments

This is another area that is overlooked by many investors. Renewing your insurance and making advanced payments on certain types of insurance cover can be claimed as tax deductions. For example, premiums on income protection insurance are tax deductible in the financial year paid. Review your insurance policies and find out which are tax deductible.

Donations

Making charitable donations is an effective way to combine your philanthropic interests with your overall tax management and wealth creation strategies. With many existing charitable organisations, you have a wide range of options to support.

Long-term planning for maximum impact

While those quick win options can still be implemented before the financial year end, Tulloch says the best way to optimise your tax strategies and wealth creation plan is to take a long-term view.

If you think planning for the next 5-10 years or into your retirement is a complex task, it is best to seek help from professional financial planners and wealth management advisers. They know the major areas as well as the tiny details of wealth creation that may not be obvious to many investors.

“Many people are focused on the short-term tactics toward the end of the financial year. But if the focus is only on those short-term steps, they could be missing out on many other long-term benefits that have compounding impact on their wealth creation,” says Tulloch.

Setting up a Trust structure

This is one of the most effective long-term strategies. Having a Trust in place gives investors the flexibility to consider the different aspects of wealth creation and management.

A Trust can also be helpful in considering and planning for inter-generational wealth transfer. This means you can plan and put in place a structure that will protect your wealth into the future.

To find out more how to optimise your wealth creation and tax management strategies, talk to your ANZ Private Banker directly, or contact us below.

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About ANZ Private Advisory

ANZ Private Advisory are a dedicated team of experts that help individual’s transition from business ownership to personal wealth.

They have extensive experience helping other business owners go through similar transitions, which means they understand the broader and more complex considerations that can affect you, your family and future generations to come.

They make preparing for life after business easier for you, by taking a holistic approach to transition planning, developing a clear roadmap, working with your other advisors, and where needed, referring you to their professional networks.

ANZ Private Advisory offers services in banking, investments and wealth solutions, to help you and your family live the life you choose after the sale of your business.

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