Taking Advantage of EOFY Changes in 2023: Wealth Architects’ Top Strategies

Superannuation Adjustments: Seizing Opportunities

The superannuation landscape is undergoing significant changes in 2023 that offer potential benefits.

The age threshold for downsizer contributions has been lowered to 55, allowing more Australians to boost their super savings when selling their primary residence.

Meanwhile, the Superannuation Guarantee is set to increase, leading to a higher percentage of your salary being automatically contributed to your super. Remember to track your concessional contributions so you benefit from this change without exceeding the annual limit.

Catch-up contributions offer an excellent way to boost your super savings, allowing you to use any unused concessional contributions cap from previous financial years.

And let’s not forget about super splitting with your spouse, a strategy that could help balance super accounts within a couple and take advantage of tax benefits.

Indexation of Total Super Balance

A significant change in 2023 is the indexation of the Total Super Balance (TSB) cap to $1.9 million, up from $1.6 million. This change allows you to shift more funds from the accumulation phase to the retirement phase, which is typically tax-free. This indexation offers greater opportunities for wealth accumulation and retirement planning, a crucial factor to consider when assessing your EOFY strategies.

Other Key EOFY Considerations

As the end of the financial year rapidly approaches, it’s crucial to prepare adequately and maximise tax benefits. Here are some general EOFY items that you should keep in mind:

Income and Deductions

Your income doesn’t solely comprise what you earn from your employer. Various sources contribute to your total income, including bank interest, dividends, managed funds income, rental property income, and even gains from cryptocurrencies. Understanding these different sources can help ensure you provide an accurate and comprehensive report of your income for tax purposes.

Deductions are an often-confusing aspect of tax returns. These can include unreimbursed expenses incurred for work, which could reduce your tax liability. Some examples of potential deductions are home office expenses, self-education costs, vehicle and travel expenses, tools and equipment, accountant or tax agent fees, personal super contributions, and donations.

Ways to Reduce Your Tax Bill

Beyond just calculating income and deductions, there are strategic steps you can take throughout the year to manage your tax effectively.

Superannuation: You can boost your super savings by making personal super contributions, receiving a government co-contribution if you’re a low or middle-income earner, entering an agreement with your employer to salary sacrifice, or making contributions to super on behalf of a low-income spouse. However, keep in mind that contributions need to be in your super account before 30 June to count for the current financial year.

Additional levies: Everyone pays the Medicare levy, and you may also have to pay the Medicare levy surcharge if your income is above a certain level and you don’t have an appropriate level of private health insurance.

Property management: If you own rental property, ensure you have the annual tax statement from your property’s managing agent and details of any personal expenses. Keep the receipts for any depreciable items and copies of the sales contract, settlement sheet, and other associated costs if you bought or sold a property.

Offsetting capital gain: If you realise a capital gain from an investment, consider offsetting this by selling a poorly performing investment, triggering a capital loss that can reduce your tax payable.

Prepaying investment loans: Some lenders may allow you to prepay 12 months interest on your investment loan. This will effectively bring forward your tax deduction into the current year, helping offset any capital gains or additional income.

Your Personalised Financial Roadmap with Wealth Architects

Navigating EOFY can be overwhelming due to the numerous financial considerations and changing regulations. At Wealth Architects, we’re here to make this process more manageable by offering personalised financial advice tailored to your unique situation and goals.

Whether you’re exploring super strategies or other EOFY planning, our expert advisors can help you optimise your wealth and secure your financial future. Let us guide you through the complexities of the EOFY landscape, helping you turn these changes into opportunities.

Ready to take control of your financial future? Contact Wealth Architects today. Let us guide you through the complexities of EOFY planning and architect a financial plan tailored to your needs. Your future starts now, and we’re here to guide you every step of the way.