The end of the financial year is just around the corner, so we’ve put together ten things to help you get your finances in order ahead of 30 June.

1. Review your portfolio

Tax time represents a great opportunity to review your portfolio and consider a strategic re-allocation of your investments. Consider your portfolio allocations – is your portfolio heavily over- or underweight in specific sectors or stocks? Are you continuing to carry stocks that have exceeded your price targets or continue to under-perform – this may be an opportune time to re-balance. If you have an SMSF, now is the time to ensure your fund is invested in line with your documented investment strategy.

2. Offset capital gains with capital losses 

Generally, if you have incurred capital losses on your investments, you can offset these capital losses against any capital gains you have made. You can also use losses you have carried forward from previous years. Just remember, income losses can only be offset against income; capital losses can only be offset against capital gains.

3. Consider the ideal timing of your asset sales

If you are thinking of selling a profitable asset this financial year, but are likely to earn a lower income in 2015-16, it may be worth postponing the sale until after 30 June; alternatively, if you expect an income windfall or higher salary from 1 July, it may be worth bringing the sale forward. As always, these decisions depend on your expectations for future asset prices, so don’t postpone a sale for tax purposes if you are expecting your investment to fall in value!

4. Make tax deductible super contributions

If you earn less than 10% of your income from eligible employment (eg you are self-employed or not employed), you are generally able to claim a tax deduction for personal contributions to superannuation. As always with super, you will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement). If you claim a deduction for it, the contribution you make will be taxed at 15% in your super fund, so your tax saving will be the difference between your marginal rate and 15% - which could be up to 34%.

5. Get more from your salary or bonus

If you are expecting a pre 30 June bonus, you may be able to sacrifice your pre-tax salary or bonus into super rather than receive it as cash. As with the deductible contributions above, this could reduce tax on your salary or bonus by up to 34%, and will allow you to take advantage of the contribution caps that apply in this financial year. Once your money is invested in super, tax on earnings is capped at 15%, which may compare favourably to investments held in your own name.

6. Use super to manage Capital Gains Tax

If you make a capital gain on the sale of an asset this financial year and earn less than 10% of your income from eligible employment, you may be able to claim a tax deduction for a contribution to superannuation, which could reduce or offset your capital gain.

7. Pre-pay investment loan interest 

If you have (or are considering establishing) a geared investment portfolio, you can pre-pay 12 months’ interest on your investment loan and claim the cost as a tax deduction in the current financial year.  This can assist you to manage your cashflow more efficiently, and potentially reduce your income tax liability this financial year.

8. Get a super top up from the Government

If you earn less than $49,4881 pa, of which at least 10% is from employment or a business, make a personal after-tax super contribution, you could qualify for a Government co-contribution of up to $500. 

9. Boost your partner’s super and reduce your tax

If you have a spouse who earns less than $13,8001 pa, consider making an after-tax super contribution on their behalf, and you could receive a tax offset of up to $540. 

10. Pre-pay your income protection premiums 

If you are employed or self-employed, income protection insurance provides peace of mind about the security of your income in the event you are unable to work due to illness or injury. Premiums for this insurance are generally tax deductible; prepaying your annual premium prior to 30 June will allow you to claim a full year of cover in advance.

It pays to be tax smart. It really does.

No matter what your situation, age or income, a little bit of End of Financial Year planning can go a long way. It can help you:

• boost your retirement savings;
• maximise your Government entitlements; and
• minimise your tax liabilities.

 
As always, preparing your portfolio for tax time should always occur in the context of a well-constructed strategy to create, grow or protect your wealth. 

Need some assistance? Contact Us and one of our Planners can sit down and look at what strategies best suit you.

Source: NAB

Investors understand that investing comes with risk and markets move in cycles. Voters understand that governments will make unpopular decisions at times. But in recent times markets and politicians have combined in something of a perfect storm for those of the generation where silver hair comes naturally.

For a start interest rates were cut to a record low of 2% by the Reserve Bank. Then bank shares - that staple of the well-funded retiree portfolio - took some headline-grabbing hits. Finally the federal government announced measures to tighten pension eligibility rules. That will see around 91,000 people losing their part-pension and joining the ranks of self-funded retirees from January 2017 although that impact is offset by the policy changes that will mean about 50,000 part pensioners will get a full pension. The other key concession made in the announcement is that while a cohort of people will lose their part-pension they will be guaranteed their health care card benefits.

With a number of major policy shifts having been flagged before this week's federal budget is delivered on Tuesday night investors are probably hoping for a period of relative calm on the regulatory change front.

Regrettably no one should be surprised that retirees - and those within sight of retirement - will have to contend with higher levels of regulatory uncertainty and risk possibly for years to come - certainly up to and beyond the next federal election due later next year.

The reason that regulatory uncertainty is here to stay for the foreseeable future is because of the range of policy reviews either under consideration or looming.

For a start the Government is yet to respond formally to the recommendations from the David Murrary-led Financial System Inquiry. 

The Murray inquiry was a year-long major review of the financial system at the macro level and its recommendations - depending on which ones are adopted - have long-term implications for sectors like banks and the broader superannuation system.

While the Government's response to the Murray recommendations is imminent the review of our tax system that has been kicked off with the "issues paper" is longer term but may be the one that investors should pay closest attention to.

Clearly the structuring of our concessional tax treatment of super is on the policy table but the other hot buttons for the tax review are the cost of tax concessions flowing from negative gearing which will be of strong interest to property investors while for share investors - and particularly self-funded retirees - is the way our dividend imputation system operates.

Dividend imputation was introduced in 1987 to remove the double taxation on company earnings.

It has become an entrenched part of the Australian investment landscape and particularly for investors operating a self-managed super fund in pension phase the refund of the imputation credits are highly valued.

In a low interest rate environment the appeal of high-yielding shares on an after-tax basis is obvious.

The issues raised around dividend imputation are wide-ranging but perhaps centre on whether or not the system - which Australia is one of only a handful of countries to have - distorts the cost of capital and therefore the way Australian companies invest. For example it is argued that dividend imputation causes Australian companies to adopt lower leverage while at the investor level imputation credits are argued to partly explain the bias towards domestic (vs foreign) equities.

Individual investors can no more control government policy developments than they can investment market moves and certainly no-one is suggesting wholesale changes to investment strategies based on policy debates.

However, the potential for change suggests investors need to stay across the issues.  If you are the trustee of your own SMSF the responsibilities are even more direct. 

That is why having access to specialist advice on your SMSF will be vital to help navigate the uncertain waters ahead. 

Source: Vanguard - Smart Investing

Dealing with illness can be stressful - both financially and emotionally. Money may be the last thing on your mind, but it's important to consider your finances and plan for the future.

Getting what you’re entitled to

Finding out you have an illness can be incredibly emotional and traumatic. Be kind to yourself and make sure you seek support from family and friends.

Speak to your employer - Check with your employer to find out how much paid sick leave you are entitled to.

Speak to your insurer - Check your insurance policies to see whether they would cover your bills or replace some of your income.

Types of insurance include:

• Total and permanent disability (TPD) insurance - covers the costs of rehabilitation, debt repayments and the future cost of living
• Trauma / Critical illness cover - covers you for specified illnesses or injuries.
• Income protection - replaces some of your income if you can't work due to injury or sickness.

Make sure you claim as soon as you can because there is often a waiting period before the policy pays out.

Early release of superannuation

There are some very limited circumstances in which you can access your super before you retire. These situations include if you suffer incapacity, on compassionate grounds or if you have a terminal medical condition.

Government assistance

If you're unable to work because of your injury or illness or because you are caring for someone, you may be entitled to a government payment.

 Getting back on track

Illnesses can have a significant impact on your finances, as you will typically have extra costs and potentially less income. When you’re ready it's important to do a stocktake of what money is coming in and what's going out.

If you or someone close to you is experiencing financial hardship or isn’t quite sure how to plan for the future due to an illness, talk to one of our Planners at Southern Advisory and they will help you create a financial plan for the future as well as determine how much you are spending and how much you can save.

If you don't have adequate insurance, you can apply for a new policy even when you’re unwell. Our Planners can assist you with obtaining cover that is right for you. Contact Us today for an obligation free consultation.

Source: www.moneysmart.gov.au