Planning for Personal Taxation: New in 2009/2010

With the financial year-end rapidly approaching, now is the time to consider opportunities to minimise your tax and/or help you to achieve your financial goals.

Our team of accountants and financial planners are up to date with the latest changes and are here to create and preserve your wealth as well as to ensure you are making the most of the tax deductions and concessions available to you.

These may include some of the following:

Transition to Retirement Income Streams
If you are 55 or older, you may be eligible to commence a “Transition to Retirement” pension.

Benefits can include:

• Receiving pension income while still working;

• Ability to salary sacrifice to superannuation to access lower tax rates;

• Concessional tax treatment within your super fund.

Please contact your adviser or financial planner to discuss the benefits available to you.

Changes to Income Tests

Since 1 July 2009, a number of changes relating to income tests have taken effect, and will impact on you this financial year. These changes affect most government subsidies and payments, including:

• Entrepreneurs' tax offset;

• Family Tax Benefit (FTB);

• Dependency rebates;

• Senior Australian tax offset;

• Pensioner tax offset

Other Planning Considerations

Assessable Income
With the reduction of personal income tax rates for residents in 2010/11, there may be benefits in delaying the receipt of taxable income until after 1 July 2010.

Capital Gains Tax
Realised capital losses are able to be offset against realised capital gains and reduce tax. Review your portfolio and crystallise capital losses before 30 June 2010. Caution - the ATO has issued a ruling that relates to “wash sales”. The ruling considers that they can apply Part IVA anti-avoidance provisions to cancel reductions and apply penalties.

Donations
Donations or gifts of $2 or more to approved organisations and charities are tax deductible. Contributions or donations to political parties or politicians are no longer tax deductible. Please ensure that you retain receipts for donations made.

Maximising Allowable Deductions
Expenses that are incurred before year end can reduce taxable income. Consider up and coming liabilities and the value in incurring them before year end.

Medical Expenses Rebate
A 20% rebate is available for net medical expenses in excess of $1,500 per annum.

Medicare Levy Surcharge
The thresholds for the imposition of the Medicare levy surcharge (if not covered by private hospital insurance) are as follows:

• Singles (no dependants) - $73,000

• Families - $146,000 (plus $1,500 for each dependant child after the first)

Motor Vehicle Expenses
There are four methods which can be used to claim a deduction. These are:

• The cents per km method;

• The log book method (log book kept over 12 weeks and updated every five years);

• One third of actual car expenses; and

• 12% of original value method

Detailed records assist in maximising deductions. Please contact us to discuss the most appropriate option for you.

Prepayments
In limited circumstances an immediate deduction is available for non-business prepaid expenditure (i.e. interest on investments). Please contact us to confirm deductibility.

Salary Sacrifice
To be effective as a strategy for you, the benefits received must be taxed at a lower rate under the Fringe Benefit Tax rules, than your salary. Due to the varying calculations under FBT rules, we are happy to discuss whether you will be better off under a salary sacrifice arrangement.

Salary Sacrifice Bonus into Superannuation
You may be able to optimise your tax position by salary sacrificing any end of year bonus into super. There are certain important considerations that need to be addressed in this regard.

Superannuation - Income
Individuals aged 60 or over will not be taxed on any payments from a superannuation fund. Individuals aged between 55 and 60, will be taxed concessionally.

Superannuation - Rebate
A rebate of up to $540 is available for superannuation contributions made during the 2010 year for the spouse of a taxpayer where the spouse’s income is less than $10,800 (this rebate is reduced for income amounts up to $13,800).

Superannuation - Government Co-Contribution
The maximum co-contribution amount that you can receive is $1,000. This is reduced by 3.33 cents for each $1 of income over $31,920 up to $61,920.

You will generally be eligible for the co-contribution if:

• You make a personal super contribution by 30 June 2010;

• 10% or more of your total income* is from eligible employment or running a business; and

• You are aged under 71
   

* The definition of income for the 2009/10 has been extended. If you intend to take advantage of this concession, please discuss this with us to ensure you meet all of the criteria.