Timing deductions for best tax outcome
As with the end of any financial year, it is important for one to maximise any tax deductions one may be entitled to, but also ensure where possible that the deduction is able to be claimed in the financial year where it has most impact. This may mean incurring deductible expenses by 30th June to reduce taxable income in this financial year, or if one’s marginal tax rate is expected to be higher next financial year, delaying deductible expenses until after 30th June.
Some deductible expenses one may wish to bring forward include:
One is allowed to prepay up to 12 months’ worth of these expenses and claim a tax deduction in the year of payment.
Eg, if one prepays 2016-2017 income protection insurance premiums in June 2016 and claim a full tax deduction in the 2015-2016 income tax return.
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Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It's also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us .