For many of us, the period just before the end of the financial year can be an important time to look at finances. Taking stock at this time is a great way to check-in on your situation and see if any changes are needed in the lead up to 30 June.

For example, it may be a good idea to review your existing (and expected) concessional contributions to superannuation for the 2021-22 financial year—to see if you are making the most of the annual concessional contributions cap limit.

Below we’ve included a list of some key EOFY considerations to bear in mind. While these strategies may help reduce your personal income tax and/or provide for your retirement, their suitability will depend on your own eligibility and circumstances. As always, it’s important to seek qualified professional advice before making any changes to your finances.

Capital gains and losses

1. Depending on your circumstances, looking at your capital gains and losses could help reduce your personal income tax, for example:

1. deferring the sale of an asset with an expected capital gain (and applicable capital gains tax liability) to a future financial year
2. deferring the sale of an asset with an expected capital gain until it has been held for 12 months or more
3. offsetting a crystalised capital gain with an existing capital loss (carried forward or otherwise) or selling an asset sitting at a loss.

Please note: While the above considerations take a tax-planning perspective, decisions of this nature should also be consistent with your overall investment strategy.

Deductible interest and expenses

2. Depending on your circumstances, increasing your deductible interest and expenses could help you reduce your income tax, for example:

1. prepaying deductible interest, such as interest payments on investment loans for things such as property or shares
2. bringing forward deductible expenses, such as income protection insurance premiums, donations to deductible gift recipient organisations, repairs/maintenance to investment properties, and work-related expenses.

Please note: The above could also be relevant when, for example, you expect your income will be lower in future financial years when compared to this financial year.

Private health insurance

3. Depending on your circumstances, look at your private health insurance status, for example:

1. purchasing private health insurance could reduce your Medicare Levy Surcharge for the period of cover. Your insurer may offer an age-based discount, or you could avoid (or reduce) the impact of the lifetime health insurance cover loading.

Superannuation

4. Depending on your circumstances, look at your superannuation and consider, for example:

1. making concessional contributions (and potentially using the carry-forward provision if your 30 June 2021 total super balance was below $500,000). Doing so could help to reduce your personal income tax and provide for your retirement
2. making non-concessional contributions (and potentially using the bring-forward rule). Doing so could help to provide for your retirement—and you may be eligible for the Government co-contribution (up to $500).

Please note: The above could also be relevant when using the First Home Super Saver Scheme.

5. Depending on your circumstances, look at your spouse’s superannuation and consider, for example:

1. splitting up to 85% of your concessional contributions for the previous financial year with your spouse
2. making non-concessional contributions for your spouse. Doing so could help to provide for your spouse’s retirement—and you may be eligible for the spouse contribution tax offset (up to $540).

Please note: The above could also help you fully utilise your combined transfer balance cap limits.

Moving forward

Just before the end of the financial year can be an opportune time to review your finances and plan for the year ahead—and by doing so, you’ll see if any further actions are required prior to 30 June.

Importantly, while the above list of EOFY considerations could be helpful with respect to several areas of your finances, please consider seeking qualified professional advice for a proper assessment of their suitability.

If you have any questions regarding this article, please contact us.