2019 Tax Planning For Individuals

As the 2019 financial year end is fast approaching, it is important to have a review of your personal tax position, plan and act accordingly before 30 June 2019. Below are some TIPs which will help to reduce your tax liability.

Claiming deductions for Personal Super Contribution

You are eligible to claim a deduction for personal super contributions if:

  • You have given your fund a ‘Notice of intent to claim or vary a deduction for personal contributions
  • Your fund has validated your notice of intent form and sent you an acknowledgment
  • You meet the age restrictions
  • you made the contributions to your fund that was not a:
    • Commonwealth public sector superannuation scheme in which you have a defined benefit interest
    • Constitutionally protected fund (CPF) or other untaxed funds that would not include your contribution in its assessable income
    • A super fund that notified us before the start of the income year that they elected to either treat all member contributions to the
      • Superfund as non-deductible
      • Defined benefit interest within the fund as non-deductible

There is no limit on the amount you can claim as a deduction. However, there are caps on the amount of super contributions you can make before you pay extra tax. The concessional (before tax) contribution cap is $25,000 for the 2018/2019 financial year, excess contributions were taxed at 46.5%)

Personal super contributions you claim as a tax deduction are included in your fund’s assessable income and are taxed at the rate of 15%.

Superannuation contributions on behalf of your spouse

If your spouse’s eligible income (assessable income plus reportable fringe benefits and reportable employer superannuation contributions) is less than $37,000 and you make a contribution to their super account of at least $3,000, you may be entitled to a tax offset of up to $540 ($3,000 x 18%).

The offset amount calculated as 18% of the total contribution amount you made to your spouse’ complying superannuation fund on behalf of your spouse. The maximum tax offset amount of $540 gradually reduces for income above $37,000 and completely phases out at an income of $40,000.

However, you are not eligible to claim this offset if your spouse:

  • Had non-concessional (after-tax) contributions that exceeded their non-concessional contributions cap ($100,000 per year since 1 July 2017), or
  • Had, on 30 June 2017, a total superannuation balance of $1.6 million or more.

Super Co-Contribution

If your total income (assessable income plus reportable fringe benefits and reportable employer superannuation contributions) is less than $37,697 and you make personal (after-tax) contributions of $1,000 to your super account, you will receive the maximum co-contribution of $500 from the government. Your entitlement will reduce progressively as your income rises and cut off at $52,697.

To be eligible, you also need to satisfy the 10% eligible income tax which 10% or more of your total income must come from employment related activities, carrying on a business or a combination of both.

You are not eligible if:

  • Had non-concessional (after-tax) contributions that exceeded your non-concessional contributions cap ($100,000 per year since 1 July 2017), or
  • Had a total superannuation balance of $1.6 million or more at the end of 30 June of the previous financial year.

Your super fund can tell you how to make personal contributions.

When you lodge your tax return, the government will pay the co-contribution to your super account automatically if you are eligible and has provided your tax file number to your superannuation fund.

Private Health Insurance (PHI)

From 1 July 2018, higher income earners may be subject to the Medicare Levy Surcharge (at the rate of either 1%, 1.25% or 1.5%) if either of the following two requirements is not satisfied:

  • The policy is a complying health insurance policy – this basically means that the policy is issued by a registered health insurer, and provides benefits in relation to fees and charges for hospital treatment provided in an Australian hospital or a day hospital facility. A PHI policy will not qualify as a complying policy if it only provides ‘extras’.
  • The excess payable in respect of benefits under the policy does not exceed:
    • $750 for single PHI policies
    • $1,500 for family PHI policies

Please be aware that the above is general advice only. Consult your accountant before you act on it. Alternatively, CALL US to book a consultation session.