Here’s why talking tax now can bring in the big bucks

Tax time 2019 is still a few months away but the best way to grab the biggest tax deductions and refunds is to start planning as early as you can.

Tax time is just three months away. How crazy is that?

And it’s going to arrive faster than anyone expects as we focus on things like the Federal Budget, federal election and first half of the footy season.

Ignoring tax until July risks missing out on thousands of dollars of extra cash flowing from potential deductions, and could even dent your retirement nest egg.

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Looming changes if Labor wins the election could also pay havoc with tax strategies and result in some handy incentives disappearing.

April is always a good time to start tax planning as it provides breathing space to make tax-deductible purchases, prepare for the end of financial year, and avoid a last-minute June rush.

Here are three key areas worth focusing on now.

YOUR JOB

There’s a chance that your marginal tax rate may be lower from July, so bringing forward any work-related deductions could make good financial sense.

Work uniforms, tools, home office equipment, magazines and journals, stationery and subscriptions are among items that can be bought before June 30 to make sure you’re not waiting more than 12 months to receive your tax deduction for them.

YOUR INVESTMENTS

Labor’s plans to get tough on negative gearing and capital gains tax benefits won’t affect existing assets — only future investments made after January 1 next year — so consider acting now if you’re planning to invest.

Tax time strategies should start early if you want to grab the best possible refund.

Regardless of the election outcome, it’s usually a good idea for property investors to spend up on stuff such as maintenance, landlord insurance and other tax-deductible costs between April and June to bring forward tax benefits.

For share investors, some forecasters say Labor’s plans to axe dividend franking credit refunds for self-funded retirees will put a dent in dividend-friendly stocks such as the banks. I reckon other more powerful factors — such as profits and global sharemarket movements — will have a bigger effect on share prices.

Don’t feel panicked into kneejerk investment reactions. Even if Labor wins the election its tax changes would still have to pass through an unpredictable parliament. And with five different Treasurers and five different Prime Ministers in the past six years, we know anything can happen there.

YOUR SUPER

It’s almost guaranteed that there will be changes to the superannuation rules in either this week’s Budget or next month’s election.

Governments on both sides just can’t keep their hands off the rules that govern the $2.7 trillion of Australians’ super savings. Some recent benefits that only started last financial year are in danger of being ditched, while new rules are promised.

One strategy in danger is the ability for workers to make tax-deductible contributions to super at any time up to their $25,000 annual cap. This means that if you have some spare cash you can pump it into your super before June 30 to boost both your tax refund and your nest egg.

Labor has opposed this rule, so this could be the final financial year for super savers to use this handy tax strategy.

Take tax seriously today, and enjoy the rewards later.

@keanemoney