Are you ready? The financial year-end is less than five weeks away (at the time of writing).
Year-end strategies 2013 focuses on ensuring that your financial housekeeping is in order so as to optimise your tax and wealth protection in a timely way. The checklist below includes a few matters that may require your attention – and soon! ‘Year-end strategies 2013’ is provided for general information only. Before acting on any of these matters, readers are encouraged to seek professional advice as to the relevance of any of the matters listed to their personal/ financial circumstances.
The year-end strategies 2013 checklist:
Fringe Benefits Tax (FBT): this one is a little out of turn, but as 31 March has recently passed, your FBT year has finished. You should have been in contact with your Accountant to ensure that all required information is available to them in time to complete lodgement of the relevant returns or documentation for the ATO.
– Private Health Insurance: have you paid the provider for this financial year so as to ensure your rebate entitlement is credited: and to avoid the Medicare levy?
– Income Protection Insurance: to establish protection and benefit from the tax deduction in this financial year, the premium will have to be paid before 30 June. To establish the correct premium, the correct cover needs to be determined and the application process completed – these could take six to eight weeks to achieve a satisfactory outcome: so ACT NOW
– Business Insurances: have these been reviewed and updated; and have they been arranged so as to achieve the tax deduction as soon as possible after actual notification of the cost?
– Tax deductible contributions for those eligible to do so are capped at $25,000: penalties apply where the actual contributions exceed this value. Ensure that your contributions will not exceed the cap before 30 June (and remember that the amounts that count are the actual amounts credited to your account by your trustee for the financial year – and can include a late contribution from previous years)
– Contributions that are not going to be tax deducted also need to be checked as to timing. Caps apply to them as well and again, the actual amounts contributed are counted: if you are nearing retirement age and wanting to ‘bring forward’ contributions this can become a critical consideration.
– Co-contribution by the government is still available (albeit at ever-diminishing ‘matching’ rates). Again, for your undeducted contribution to be eligible you need to have an income within the prescribed limit; and the contribution must be in the hands of your trustee by 30 June.
– Under rules that now apply to discretionary trusts the ATO expects that the trustee will comply with the terms of the Trust Deed under which they take their authority. In virtually all circumstances this means that your trustee should have determined the basis of distribution to be made before 30 June.
– To comply with this need there are a couple of key issues:
- Is the beneficiary eligible under the trust deed?
- Does the eligible beneficiary hold a Tax File Number (TFN); and have they advised you of that number?
- Has the Trust Deed been perused to ensure that the distribution is in accordance with the provisions of the Trust?
(For more detail on these matters refer the transcript of the podcast interview between the Senior Tax Council from CPA Australia and Fiona Dillon, his counterpart at the ATO: pages 2, 3 and 5 are of particular relevance.)
Where prepayment is available to you under terms that will make the payment eligible for deduction in this year’s tax calculations, you should make arrangements with your financier to make the payment prior to 30 June. This prepayment could apply to business loans and to loans established to acquire investment assets (such as Margin Loans).
The above list of 2013 year-end strategies is not intended to be a complete list of actions you should be considering in your individual circumstances: there may be other tax and financial management issues for you to consider. We suggest that you review the above list, prepare to make the appropriate payments and other arrangements – and consult with your accountant and your ContinuumFP adviser to ensure all appropriate actions are taken within the required timeframes. Your adviser at Continuum Financial Planners will be able to provide guidance and in appropriate circumstances, advice in relation to Interest Prepayments, Income Protection Insurance and Superannuation. Please call (07) 3421 3456 or use the Contact-Us page at our website.