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Q&A - cutting your tax bill

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Published on: Tuesday, August 11, 2009

Q. I am a pretty high income earner and would like to cut my pending tax bill and would like to know my options for cutting my tax bill. I have been slack in the past but now I am married I want to tidy up my act. What options do I have?

John. Ashfield, NSW

A. Negative gearing into property or shares where you borrow and pay the interest upfront can give you a decent deduction. Many people do this but I have to say I hate investing purely for tax purposes. If you have a great investment prospect and you can make it tax-effective, then that’s OK. Lots of people have fallen into agricultural schemes such as Timbercorp and Great Southern to get tax cuts and have lost a heap of money. You could make a decent contribution to your super fund before the end of the year. Remember that the concessional contribution limits of $100K for 50-year olds and over, and the $50K for under 50s, will be halved after June 30, so this could be time to put extra into super. You could also use the co-contribution rule to a spouse’s super fund where you put in $1000 and the Government matches it up to $1,500. The maximum the Government puts in is reduced to $1,000 after June 30. If you had shares and copped losses, you might think about selling them to use these losses to offset any income you made on investments over the year. Finally, as you said that you are getting serious about your taxes now, why not search for a great tax agent/accountant who will become a trusted partner in your relationship with the tax office over the rest of your working life? This is the best advice I can give and finding that person before June 30 might be one hell of a great idea. 

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Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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