Host: Jovan Cvetkoski from Knight Group is here. Let’s talk about getting money into people’s super and getting organised.
Jovan: We’re talking end-of-financial-year tips. The end of the year is fast approaching, so it’s a good time to get your financial house in order before 30 June. The first one that comes to mind is topping up your superannuation. You can contribute $30,000 before tax – that’s your concessional threshold, which includes the super guarantee your employer pays. The reason to do it: you pay 15% on that contribution instead of your marginal rate, or 30% if you earn over $250,000.
Host: Where would people find $30,000?
Jovan: Cash in the bank, an inheritance, a mortgage redraw – or, if you’re old enough and still working, pulling it out of super and putting it back in. Say you earn $100,000 and your employer puts in about $12,500. You could add a further $17,500. Rather than being taxed on $100,000, you’re taxed on $100,000 less what you put in. For every dollar into super up to the limit, you could save 15% if your tax rate is 30%, or 22% if you’re on 37%.
Jovan: There’s another good one – catch-up contributions. If you have less than $500,000 in super as at 1 July last year, you can bring forward unused contributions from the last five years. It was $30,000 this year and last, and $27,500 before that. If you didn’t contribute the maximum, it rolls forward – really useful in a high-income year, say if you sold a property and have a capital gain. Ask your accountant, or log into MyGov, link the ATO and check the super tab.
Host: What about spouse contributions?
Jovan: If your spouse earns less than $40,000 you can get a tax offset. And you can make after-tax contributions – up to $120,000 a year, or you can bring forward future years. If you’ve got an inheritance, investing it in your own name means paying tax at your marginal rate; inside super the earnings are taxed at 15%, so you get ahead faster. Another one: the concessional cap is going up from $30,000 to $32,500 before tax next year, so you may need to adjust your salary sacrifice. I like salary sacrifice because it enforces discipline – you’re not scrambling in June.
Host: Deductions at tax time?
Jovan: Keep records and receipts. The ATO is getting far more sophisticated at trawling data – think a big net, not a fishing rod. You can claim a deduction for expenses incurred in earning your income; it’s more relevant for self-employed people. Hard copy or electronic is fine – I tell clients to photograph receipts as a backup. You can also prepay deductible expenses: the ATO lets investors prepay up to 13 months’ interest on investment loans, bringing the deduction forward. And giving to charity is deductible – as long as there isn’t a prize involved, like a home lottery ticket.
Host: Buying an asset for your business?
Jovan: Small businesses can buy an asset up to $20,000 and write it off immediately if turnover is under $10 million – but buy something the business actually needs; don’t just spend to save tax. And I’m passionate about income protection insurance: premiums are tax deductible, and I view it like home, contents or car insurance – you should have it. Even employees should consider it, because your sick, annual and long service leave will run out.
Host: What’s the ATO cracking down on?
Jovan: Work-related expenses, especially working from home – for dual-use items like your mobile, you can only claim the work-use percentage. There’s an 80-cents-per-hour fixed-rate method most people use. Investment properties: the ATO says 9 in 10 owners get their returns wrong. General repairs and maintenance – like replacing carpet – are deductible immediately, but a capital improvement like a kitchen or bathroom renovation isn’t; that reduces your capital gain when you sell. Undeclared income from rideshare, food delivery, crypto and the gig economy – data-matching catches it. And small-business expense mixing and cash jobs. The ATO has broad powers – they can call your bank for information, and they might come knocking four or five years later.
Host: And lodging on time?
Jovan: Lodge on time, but not too early. A lot of data is pre-filled – bank interest, dividends, private health insurance – so if you lodge in July or August you’ll often miss it and have to re-lodge. The ATO says lodging very early makes your return twice as likely to be flagged. The deadline is end of October without an accountant, or May the following year with one – so August or September is better. To stay on the ATO’s good side: don’t claim more than you’re entitled to, keep your records, lodge on time but not early, and consider having an accountant if your affairs are complex.
