Deferring Income and Prepaying Expenses

Bearing in mind your cash flow position, you may wish to consider deferring income and prepaying expenses.   You should keep in mind your tax bracket for both financial years to ensure you are not taxed at a higher rate on the deferred income.

If you return income on a cash basis, you are assessed on income as it's received.   A simple end of year tax planning strategy is to delay (if possible) receipt of the income until after 30 June 2017.

Small business and individuals are also able to prepay expenses and, subject to a few rules, immediately claim the expenditure as a tax deduction upfront. 

For more information please talk to us today.

Any advice in this article has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on any advice, consider whether it is appropriate to your objectives, financial situation and needs.

Super Reform (Contributions)

On 1 July 2017 rule changes will come into effect that may impact your retirement strategy and possibly the contributions you make into superannuation. 

  1. The cap on concessional (pre-tax) super contributions will reduce from $30,000 pa or $35,000 pa (depending on age) to $25,000 pa.
  2. An additional 15% tax on concessional contributions will be payable by people with incomes greater than $250,000 pa (currently $300,000 pa).
  3. The cap on non-concessional (after-tax) super contributions will reduce to $100,000 pa (currently $180,000 pa) and $300,000 when using the ‘bring-forward’ rule (currently $540,000). Other conditions also apply.
  4. Non-concessional contributions will not be able to be made if you have a total superannuation balance over $1.6 million.

It’s important to review your current contribution strategy to assess the impact of these changes and any amendments that may be required.   Care should be taken to avoid contributing in excess of the contribution caps, as this can result in tax penalties.