The end of the financial year is less than two weeks away. This means that you don’t have long to act to ensure that you pay the optimal amount of tax. Here are our 6 top tax tips:

1. Have you been working from home?

With working from home becoming the “norm” for many people, accessing a tax deduction for “home expenses” is a “no brainer”. This year, there are two methods you can use to claim a deduction: the ‘fixed rate method’ or the ‘actual cost method’.

With the ‘fixed rate method’, you claim 67 cents for each hour you worked from home (rate unchanged from 22/23). This rate includes the additional running expenses you incurred for:

• Home and mobile internet or data expenses.
• Mobile and home phone usage.
• Energy expenses for heating, cooling and lighting; and
• Stationery and computer consumables, such as printer ink and paper.

If you worked (for example) 700 hours at home during the year (equivalent to roughly two days a week for 46 weeks on a 7.6 hour day) you can claim a deduction of $441.

To access this deduction, you will need to have a record of the number of hours you worked from home during the year, for example a timesheet, roster or diary, and at least one record of the additional running expenses you incurred (for example, a quarterly electricity bill).

Additionally, you can claim a deduction for the depreciation of assets used to work from home, such as computers or office furniture (chairs, desks or bookshelves). You can’t, however, claim a separate deduction for expenses covered by the fixed rate, for example, mobile phone expenses when not working at home.

An alternative to the ‘fixed rate method’ is the ‘actual cost method’ for expenses such as electricity, phone, internet, cleaning, computer consumables, stationery, depreciation of office furniture and depreciation of computers or phones. Childcare, mortgage interest rates, water or tea or coffee expenses aren’t eligible.

For the ‘fixed rate method:

you will need receipts, a record of hours worked and a diary of a representative four week period and follow the ATO’s rules for apportioning expenses between work-related and home usage.

2. Can you bring forward or accelerate expenses, defer revenue?

If your cash flow is sound and you have a taxable income (that is, you will be paying tax this financial year), you could consider bringing forward expenses and/or deferring revenue. Essentially, a tax deferral strategy where you shift the burden from paying tax this financial year to next year.

Pre-paying interest on loans (for example, a business loan, investor home loan or margin loan) is a classic example. Technically, you can pre-pay interest for up to 13 months in advance and claim the interest expense as a tax deduction in the current tax year.

Taking out an annual subscription to an investment newsletter or professional journal, which will generally be tax deductible, is another example. You can also consider accelerating the payment of other general expenses.

And please don’t forget about our charities, many of whom have found that cost of living pressures have led to an increase in demand for their services. Donations are, of course, tax deductible, meaning that for high rate taxpayers, the Government pays almost half. (If your marginal tax rate is 47%, a donation of $100 only costs $53). Get your donations in by 30 June!

3. Can you get a tax offset for helping grow your partner’s super?

If your spouse earns less than $37,000 and you make a spouse super contribution of up to $3,000, you can claim a personal tax offset of 18% of the contribution, up to a maximum of $540. Tax offsets are the same as tax rebates – a dollar for dollar saving in how much tax you will pay.

The offset phases out when your spouse earns $40,000 or more. Income includes assessable income, reportable fringe benefits and reportable employer super contributions, such as salary sacrifice. And you can’t claim the offset if your spouse exceeded their non-concessional super cap of $110,000 or their total super balance was more than $1.9 million at the start of the 23/24 year.

4. Can you claim a tax deduction for making a personal super contribution?

There are two caps that limit how much you can contribute into super. A cap on concessional (or pre-tax) contributions of $27,500 and a cap on non-concessional (or post tax) contributions of $110,000.

Concessional contributions include the employer’s compulsory super guarantee contribution of 11% and any salary sacrifice contributions you make. There is also a third form, which is a personal contribution you make and claim a tax deduction for.

There are two important caveats. Firstly, you must be eligible to make a super contribution, which means that you must be under 75 (technically, you can still make a super contribution up to 28 days after turning 75). Secondly, if aged between 67 and 74, you must pass the ‘work test’ in order to claim the tax deduction. The ‘work test’ is met if during the financial year, you worked 40 hours or more over any consecutive period of 30 days.

In total, concessional contributions can’t exceed the cap of $27,500.

Let’s take an example. Tom is 45 and earning a gross salary of $100,000. His employer contributes $11,000 to his super, and he has elected to salary sacrifice a further $6,000. Potentially, prior to 30 June, Tom can contribute a further $10,5000 to super and claim this amount as a tax deduction, which he does when he completes his 23/24 tax return. He will also need to notify his super fund and complete a ‘Notice of intent to claim a tax deduction for a personal super contribution’.

5. Can you get the Government to chip in and boost your partner’s or kid’s super?

There aren’t too many free handouts from government. The federal government’s super co-contribution remains one of the few that’s available. If eligible, the government will contribute up to $500 if a personal (non-concessional) super contribution of $1,000 is made. The government matches on a 50% basis. This means that for every dollar of personal contribution made, the government makes a co-contribution of $0.50, up to an overall maximum contribution by the government of $500.

To be eligible, there are 3 tests. The person’s taxable income must be under $43,445 (it starts to phase out from this level, cutting out completely at $58,445), they must be under 71 at the end of the year, and critically, at least 10% of their income must be earned from an employment source. Also, they can’t have exceeded the non-concessional cap or have a total super balance over $1.9 million.

While you may not qualify for the co-contribution, this can be a great way to boost a spouse’s super or even an adult child. For example, if your child or grandchild is a university student and doing part time work, you could make a personal contribution of $1,000 on their behalf – and the government will chip in $500!

6. Do you have any capital gains or capital losses?

When assets are sold, capital gains tax (CGT) is payable. The main exemption is the family home. The gain (essentially the sale proceeds less the cost base) is counted as part of your assessable income and taxed at your marginal tax rate. If you have owned the asset for more than 12 months, individuals are eligible for a 50% discount (meaning they only pay tax on 50% of the gain), while super funds are eligible for a one-third discount (they pay tax on two-thirds of the gain). There is no discount for companies that own assets.

Capital gains can be offset by capital losses, and if the losses can’t be applied, they can be carried forward from one tax year to the next and then applied to offset a capital gain. If you make a capital loss, don’t forget about it.

If you have taken a gain in 23/24 and will be paying tax, consider these questions:

• Do you have any carried forward capital losses from 22/23 you can apply?
• Have you taken losses on other assets in 23/24 you can apply?
• Do you have assets in a loss situation that you should sell now to crystalize a loss?

While you should never do anything just for tax reasons, crystalizing a loss on a non-performing asset can often make sense. Potentially, you can re-purchase the asset if you subsequently decide that the sale was a mistake.

Conversely, If you have taken capital losses during the year, you may want to consider the disposal of assets in a gain situation.

One other point to note. If you have multiple parcels of the same asset (for example, shares acquired through a dividend re-investment plan) and you sell part of that asset, you can choose which parcel(s) you sell. There is no set formula (such as FIFO (first in first out) or LIFO (last in first out)) to apply, meaning that you can select the parcels which best optimise your CGT liability.

Important: 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. Consider the appropriateness of the information in regards to your circumstances.