from my course:
Exploiting Bracket Shifts
Over the next 3 years (as of June 05), the ATO will be reducing income taxes. Brackets will shift outward, allowing higher income at each tax rate. Ideally it is best to have income taxed at next years lower rate if the income can be defferred.
The end of the financial year historically sees investors looking to off-load investments. But before doing this it is important to be aware of possible Capital Gains Tax (CGT) implications. The end of this financial year may not be the best time to look at selling shares or other assets as you may be hit for a large CGT bill, depending on your other earnings and the length of time you have held that asset. Investors should delay asset sales until the new financial year. Instead of selling June 30, sell July 1. You will get a lower tax rate and a year extra to pay your bill.
Anyone considering a redundancy or retirement payout should negotiate with their employer to pay them after July 1.
If you're expecting a bonus, you may also be able to defer it until after June 30. Bonuses are taxed according to the date they're paid, so ask your employer if it can be delayed until the new tax year.
Don't get paid in advance if you're taking holiday or long service leave that straddles the change of financial year.
If you have a private company, it may be worth waiting until the new tax year to pay dividends. Investors in products like bank bills can ensure any new investment matures after June 30.
Investors who know they are going to realise a big capital gain could take out an investment loan early in the financial year. In the same year that they made the gain, they could claim a tax deduction for the interest paid on the loan and then prepay the following year's interest, giving them two years' interest deductions against their taxable income when calculating the gains tax.
Many investors also split the sale of assets over two tax years to keep the tax rate down.
The other method of deferring income to next year is boosting your tax deductions this year. A tax deduction this year could be worth 43.5c. Next year it will be 31.5c.
Pay for any necessary work expenses now, rather than putting it off until the new financial year. If you have bills, pay them before the end of the financial year instead of the due date in the New Year.
Attend to repairs and maintenance on business equipment or cars, rental properties et al, in the final weeks of the tax year.
Income protection insurance is tax-deductible, so your annual premium should be paid in full by the end of the tax year.
If you are able to make a tax-deductible super contribution, this is a good way to reduce your taxable income this year. The self-employed and other "eligible persons" (anyone who earns less than 10 per cent of their income from employment) can claim a full tax deduction on the first $5000 they contribute each year, plus 75 per cent of any excess up to age-based limits.