Tax Year End — 30 June 2022

As an employee, you may want to sacrifice your pre-tax salary or bonus into super rather than receive it as cash, so you will:
• Reduce tax on your salary or bonus by up to 30%, and
• Take advantage of the contribution cap that applies in this financial year.
With the new changes in superannuation deductibility, you can now make a personal contribution to super directly and make “catch-up” superannuation contributions using your unused concessional contributions caps (for up to five years) from 1 July 2018.

The concessional contributions cap for the 2022 financial year is $27,500. If you are making personal contributions and would like to claim a tax deduction, remember to give your superannuation fund a notice of intent to claim a tax deduction and that you receive an acknowledgment letter from your superfund. This ensures that you are allowed the deduction when the ATO matches its records to your superannuation fund.

AAG Wealth Management and Client Care Teams can help.

You are allowed to put into superannuation an amount of after-tax funds (known as non-concessional contributions) of up to $100,000 per annum (and more if you use the ‘bring forward’ rule). To assist in boosting your retirement savings, you can consider several strategies:

If you have an investment in your name, you may want to cash out the investment and use the money to make a personal after-tax super contribution, so you can:
• Reduce tax on investment earnings by up to 30%, and
• Increase your retirement savings.

If you have received an inheritance or a windfall, you can consider putting those funds into superannuation, and the earnings on those funds will be taxed at 15% rather than at your standard marginal tax rate.

AAG Client Care Team can help.

Individuals aged 65 years or older can make downsizer contributions of up to $300,000 into their superannuation using the proceeds from the sale of their primary residence where sale contracts are exchanged on or after One July 2018 (and superannuation providers can accept such contributions).

AAG Client Care Team can help.

If you earn $41,112 or less for the tax year ending 30 June 2022, you may want to make a personal after-tax super contribution of $1,000, and you may qualify for a government co-contribution of up to $500.

You could also make this contribution for your spouse to top up their super if they earn $41,112 or less, and you can also claim the co-contribution for your spouse.

Alternatively, if you have a spouse who earns $37,000 or less for the year to 30 June 2022 (subject to other conditions), you may want to make an after-tax super contribution on their behalf, and you can receive a tax offset of up to $540.

AAG Client Care Team can help.

The income threshold at which the additional 15% (‘division 293’) tax is payable on super $250,000 p.A. Where you are required to pay this extra tax, making super contributions within the cap is still a tax-effective strategy.

With super contributions taxed at a maximum of 30% and investment earnings in super taxed at a maximum of 15%, both these tax points are more favourable when compared to the highest marginal tax rate of 47% (including the Medicare levy).

AAG Consulting Team can help.

Ensure that you have kept an accurate and complete Motor Vehicle Logbook for at least 12 weeks. The start date for the 12-week period must be on or before 30 June 2022. You should record your odometer reading as of 30 June 2022 and keep all receipts/invoices for your motor vehicle expenses (e.g. fuel, interest, servicing and insurance). Once prepared, You can generally use a logbook for a 5-year period.

An alternative (with no logbook needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.

AAG Client Care Team can help.

If you have travelled for work purposes and would like to claim the costs associated with the travel, ensure you have maintained a travel diary if you have travelled away from home for six or more nights in a row. If you intend to claim for travel to a rental property, please refer to the ATO website to check your eligibility.

AAG Client Care Team can help.

Make your donations to charities that have Deductible Gift Recipients (DGR). Ensure, wherever possible, that you get your receipt in the higher-earning spouse’s name.

AAG Client Care Team can help.

Calculate how much you use your mobile phone and the internet for work.

AAG Client Care Team can help.

Consider your laundry expenses, and check if you are eligible to make a claim.

AAG Client Care Team can help.

Ensure that you have purchased all applicable sun protection items before 30 June 2022 and keep your receipts. This includes sunglasses, long sleeve clothing, hats, and sunscreen. You need to link the sun protection expenses to your work and show the relationship to the income you earn to justify a claim.

Don’t forget to keep any receipts for work-related expenses such as uniforms, training courses and learning materials, as these may be tax-deductible.

Otherwise, you can claim up to $300 of work-related expenses without receipts, provided the claims are reasonable for outgoings related to earning assessable income. Even if the total amount you are claiming is $300 or less, you need to be able to show how you worked out your claims, but you do not need written evidence.

AAG Client Care Team can help.

With working from home increasing over the last few years, You can use the following methods to claim home office expenses.
• Fixed-rate – A fixed rate of 52 cents per hour can be claimed for each hour worked from home and represents running expenses. This method is simple and more commonly used as it does not require full substantiation of actual costs. You can also claim the work-related portion of home internet, home phone, and mobile phones in addition to the 52 cents per hour.

• Actual running expenses – To calculate the claim for running costs, employees can use the actual running expenses method as an alternative to the fixed rate method. This method is more complex, requiring more detailed records, but may result in a more significant claim. You can claim the work-related portion of home internet, home phone, and mobile phones in addition to the running costs.

• Shortcut method – Given the volume of people required to work from home due to COVID-19, the ATO has provided a shortcut method to claim tax deductions at a flat rate of 80 cents per hour. This method covers all running costs (including depreciation, phone and internet costs).

AAG Client Care Team can help.

Depending on your situation, you may want to consider pre-paying your expenses, interest and income Protection insurance.

You can prepay expenses relating to investment activities before 30 June 2022. You can prepay up to 12 months of interest before 30 June on a loan for a property or share investment and claim a tax deduction this financial year. Also, other expenses relating to your investments can be prepaid before 30 June, including rental property repairs, memberships, subscriptions, and journals.

Income Protection insurance premiums are generally tax-deductible as they protect your income for the future. You may want to pay your premiums for your Income Protection insurance 12 months in advance, so you can:
• Bring forward your tax deduction; and
• Pay less income tax this financial year.

AAG Wealth Protection can help.

From 1 July 2021, if you’re an employee, sole trader or contractor and you pay for a COVID-19 test for a work-related purpose, you can claim a tax deduction. Remember to keep all your receipts!

AAG Consulting Team can help.

You may be entitled to an immediate deduction for certain prepaid expenses where the goods or services will be provided within 12 months from the date of expenditure.
For example, if you have an Investment loan used to fund an investment property or shares, you can pay the interest in advance for the next 12 months and claim the tax deduction in the current financial year.
This can be effective in many instances, including:
• If you have more income this year and are retiring or expecting your income to reduce next year;
• If you want to bring a tax deduction forward into this year as you received a one-off bonus or other income; and
• If you made a capital gain on an investment.
This can also be an excellent time to review the structure of your home loans so that they are the most tax-effective that they can be.
Due to the time it takes to deal with bank regulations and rules, we recommend reviewing this strategy as a priority. As we are tax accountants and finance brokers, we can assist you with reviewing the strategy and implementation.

AAG Finance Team can help.

Clients who are the legal owners of assets such as shares or Term Deposits can expect to be taxed on the income. Hence, we recommend you review how your investments are held and consider if it’s worthwhile holding the investments in the lower-income earning spouse’s name to save tax.

However, any change of ownership needs to be planned carefully due to capital gains tax and stamp duty implications. Please get in touch with us to discuss this further.

AAG Wealth Management and Client Care Teams can help.

You should also review the benefit of mortgage Offset Accounts and their use. Generally, Offset Accounts reduce the amount of interest you pay, whereas income from funds held in a bank account that pays interest is taxable income.

The Offset Account reduces the amount of interest payable on your home loan, so you are saving interest on a non-tax-deductible expense. Having the monies held in a separate standard bank account and not offset can mean that you’re paying tax on a small amount of interest and not utilising the offset to its full advantage.

AAG Wealth Management Team can help.

If you have claimed realised Capital Gains this year from your investments, you may want to trigger a capital loss by selling a poorly performing investment that no longer suits your circumstances, so you can:
• Use the capital loss to offset your taxable Capital Gain and save tax; and
• Free up money for more suitable investment opportunities.

AAG Wealth Management Team can help.

If you are thinking of selling a profitable asset this financial year, you may want to defer the sale until AFTER 30 June 2022 to:
• Defer paying Capital Gains Tax (CGT); and
• Reduce your CGT liability.

The Contract Date (not the Settlement Date) is generally the key date for working out when a sale or purchase occurred.

AAG Wealth Management and Client Care Teams can help.

New rates for Low and Middle-Income Tax Offset (LMITO) for FY 2022.

AAG Consulting Team can help.

If you are single and your income is above $90,000 or if you have a spouse and your combined income is more than $180,000, you should consider private health insurance if not already held. MLS may be payable if you do not have appropriate private health cover (which may cost less than the MLS payable).

AAG Client Care Team can help.