TAX YEAR END – 30 JUNE 2020
This is the third and final article in our series and today we discuss Capital Gains and Investment strategies.
TAX PLANNING STRATEGIES PART 3: Capital Gains and Investments Review
|TAX ITEM||EXPLANATION||AAG TEAM|
|REVIEW AND PREPAY INTEREST ON INVESTMENT LOANS||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 which is used to fund an investment property or shares, you are able to 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 a number of instances, including:
This can also be an effective 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 that 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 the review of the strategy and implementation.
|CHECK THE OWNERSHIP OF INVESTMENTS||For 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 the way that your investments are held and consider if it’s worthwhile holding the investments in the lower income earning spouse’s name, in order to save tax.||INVESTMENTS
|MORTGAGE OFFSET ACCOUNTS||Mortgage Offset Accounts and their use should also be reviewed. Generally, Offset Accounts reduce the amount of interest that you pay, whereas income from funds held in a bank account that pays interest, is taxable income.
The Offset Account is reducing 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.
|REVIEW YOUR INVESTMENT CAPITAL GAINS AND LOSSES||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:
|DEFER ASSET SALES TO SAVE TAX||
If you are thinking of selling a profitable asset this financial year, you may want to defer the sale until a future financial year, so you can:
|MEDICARE LEVY SURCHARGE (MLS) / HEALTH INSURANCE||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 in the absence of having appropriate private health cover (which may cost less than the MLS payable).||CLIENT SERVICES|
Please email us at email@example.com if you have any queries.
We will be in touch again in the new financial year to discuss your specific requirements for your tax return and to help you to maximise your claims.
We look forward to assisting you with your tax returns.