As June 30 fast approaches, there is still time to consider the strategies available to you this financial year to build your wealth, some of which are discussed below.
Paying interest in advance
Borrowing to invest is a tax-effective means of wealth accumulation - investors borrow for investment purposes, and claim the interest on the borrowed funds as a tax deduction.
This strategy is consistent with many investors’ objectives as it allows you to purchase property, shares, or any other asset that generates assessable income. It also enables you to bring forward and pay next year’s interest cost and claim a tax deduction for those costs this financial year.
Making a non-concessional contribution to super (Government Co-contribution Scheme)
There is a federal government scheme in which people who earn less than $35,454pa and make a non-concessional contribution to superannuation (a contribution for which no tax deduction will be claimed), may be eligible to receive a government contribution to their superannuation.
Under the scheme, the government will contribute up to $0.50 for each $1.00 you contribute to your super fund up to $500. This entitlement reduces for every dollar earned up to the cut-off annual income of $50,454.
For those eligible, this strategy can provide a return on every dollar contributed to super.
Making a concessional contribution to super
Concessional contributions to superannuation are those contributions made to super for which a tax deduction is being claimed. Using this strategy, anyone who earns less than 10% of their income from an employer can claim a tax deduction for contributions they make, up to maximum limits.
The federal government pays a 15% Low Income Superannuation Contribution of up to $500 on concessional contributions made by individuals with a taxable income of less than $37,000 per year.
This strategy can assist you to bolster your retirement savings whilst managing your tax liability prior to retirement.
Paying income protection premiums in advance
Income protection insurance can pay a monthly benefit of up to 75% of your salary if you are unable to work due to illness or injury, with the premiums being tax deductible. Paying premiums in advance enables you to bring forward the following financial year’s premiums to claim a tax deduction this financial year.
This strategy enables you to protect your existing and potential wealth by taking out insurance to cover you against those events which can disrupt even the best laid plans.
There are many end-of-financial-year strategies that have tangible benefits to assist your wealth accumulation and protection objectives, so contact your Accountant or Financial Planner now to discuss and implement any of these.