I tolerate Eureka Report’s spruiking for the occasional good free article. Like 10 costly tax mistakes by Scott Francis. As tax time is important it’s worth skimming the article even if you are well versed on the topic. Scott’s main points are summarised under the Don’ts.

Tax Time Don’ts

• Don’t make tax considerations a key driver in decisions e.g MIS, but do consider tax implications e.g. hold off investing in managed funds until the new tax year due to their tax inefficient distribution of capital gains.
• Don’t do a wash sale, i.e. avoid transacting in an asset just to claim a tax loss. Plus make sure all deductions match your personal situation and consider which year any delay-able expenses should be incurred.
• Don’t put too much in super, but make sure you maximise super tax benefits, especially any free money.
• Don’t live beyond your means. Scott’s example was to earmark this years tax cut to extra mortgage payments or additional super contributions.
• Failing to claim for charitable donations. Worse yet, failing to donate in the first place.
• Not claiming the $1000 tax exemption for ESO. If you don’t know what an ESO is then ignore this one.
• Finally, failing to get organised. Is there any time when that’s a do?

Dean’s Dos

Move investments between tax owners, eg from personal or trust to SMSF, based on sound investment strategies with tax implications considered but not driving the decision.

Live below your means. One of the best rewards of doing so is the greatest power in the world, the power of compounding. That’s probably basic stuff to you, but if it’s not then the first thing you should do is understand compounding and then more broadly the time value of money.

Get organised now. Not only for this years tax, but for everything! Are you organised?

Talk to your accountant, especially if that is yourself and look at what can be done to maximise your wealth without risk and most importantly without commissions to her. Both what can be done for this tax year and more importantly for future years. If you’d entertain the thought of some risk then find out some with higher rewards for more risk.

Always look to minimise your personal debt. Debt should be held where it provides an interest tax shelter. That is within a business, trust or fund where the interest is a tax deductible expense. This one tip can result in significant annual tax savings by maximising your financial structure.

Check your path along your financial plan. If you laugh “what plan?” Then make one.

Disclosure: Of course this is not advice, at best consider it a tip for further investigation. As a trustee for an investment trust and a self managed super fund I prepare their accounts and tax as well as my own and my wifes tax returns. As such I can’t promise that I’m not for-running any of this advice, nor will I inform you if I stop using it. I’d probably subscribe to the Eureka Report if I had more time to read it and it cost less. Despite that, it is one of the best value Australian newsletters.

Related posts:

1. SMSF’s the Largest and Best
2. Self Managed Superannuation Fund (SMSF) Setup