Why sorting your tax early this year is more important than ever

Tax planning before June 2024 is more important than ever as the tax rates for this year are at an all-time high and rates will be considerably lower in following years.

You need to look for every tax deduction and defer any income you can, and take advice on your particular circumstances so you don’t overdo it. Looking at the tax rate changes on the Australian Tax Office’s website, it is hard to imagine anyone not being in a lower tax bracket next year.

With tax rates at an all-time high, getting your house in order tax-wise is more important than ever.Credit: Dominic Lorrimer

These changes were legislated earlier this year as part of the controversial stage three tax cuts passed by the Morrison government in 2019. To take advantage of these changes in the tax rates, consider the following before June 2024:

• Maximise your superannuation contributions – check for any unused caps
• Pay deductible interest up to 12 months in advance on investment loans. You must make specific arrangements with the bank, not just pay more off the loan
• Buy now if you need anything for work – businesses get up to a $30,000 immediate write-off
• Businesses, make lease payments up to 12 months in advance
• Commence repairs on your rental property
• Defer receiving bonuses until next financial year

Pay what you can off your HECS

Each year at June 1 your HECS and similar debts are indexed for inflation. Last year the uplift was 7 per cent, this year it is expected to be 4.7 per cent, though both figures will be lowered after the government’s announced student debt reforms.

The HECS your employer deducts from your pay does not reduce your HECS debt until your tax return is lodged, so it will not reduce your debt as of June 1, 2024. If this is your last year of paying HECS and you can find the funds to pay off the debt at the end May then you will save yourself 4.7 per cent. When you do your tax return in July all the employer deductions will be refunded.

Get your house in order

Logbook – You need to keep a logbook for three months every five years to claim over 5000 kilometres. If you have just started using your car for work or your five years are up, make sure you at least start a logbook before June 30, 2024.

Odometer reading – There are many reasons to take the odometer reading of your car, company vehicles etc, as it is on June 30. No harm done if you don’t need it.

Detailed reasonable estimate – Do you use your car for work for less than 5000 kilometres? Keep a one-month diary of its work-related use before June 30 as a representative sample for the year to claim 85 cents per kilometre.

One month diary for apportionment– This applies to any items that are used for both work and private. You need to show the ratio of work to private use for a laptop by recording each hour’s use for a month. Make things easier with your phone, just screenshot a month of recent calls before June 30, print them and mark each call either work or private.

Home office – To claim the hourly rate of 67 cents you must keep a daily diary to record every hour worked. This rate covers your phone, stationery, power and internet. It may be better to claim actual costs.

Rental property depreciation schedule – Have you purchased an investment property that was built or renovated after September 16, 1987? If so, pay for the depreciation schedule before June 30 for a full tax deduction.

Have you sorted your 2023 tax?

If you have not lodged your 2023 tax return by June 30 you may have to pay back your Centrelink entitlements with no opportunity to reclaim them when you do eventually lodge.

If you are going to claim superannuation contributions you made yourself, in your 2023 tax return you need to have your notice of intention to claim lodged with your superannuation fund before June 30.

Julia Hartman founded BAN TACS Accountants over 30 years ago and is still passionate about all things tax.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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