Tax minimisation and ip loan - 18 day window

I was retrenched, and the money paid to me I have placed in offset account. The effect is that the amount “owing” on the ip is negligible, and so no interest has been paid since March. I expect to make $20k net income from the property. Next financial year I expect to not earn much, but this year, because of recent retrenchment I will probably go to top tax tier. Is there anything I can do to minimise tax at this late stage. I got such a fright when I was retrenched that I just wanted to minimise expenditure but I suspect I did myself a disservice!

 

Yep just bring forward deductions.

Get advice though as merely paying things ahead of time won't work

 

@Rolf Latham @Terry_w

I use to pay interest for next 13 months in advance and get a tax deduction in the year I paid (just before 30th June). I assumed they have ended that.

 

You can still pay interest in advance up to 12 months, but if you have nearly paid off your IP, there wouldn't be much interest expense to pay in advance.

How old are you? Would you consider making a deductible super contribution? If you have met a condition of release (over 60 and retired or over 65) then you may be able to withdraw the super as a pension.

 

If you pay 12 months interest in advance on (say) 1st June this year, of $10,000, can I claim a deduction of $10,000 this FY? Or do I need to apportion the $10k, so $10k/12 deducted this year and $10k x 11/12 deducted next FY?

 

Yes you can claim the full $10k this year

 

Remember not everything is taxed in a redundancy Redundancy payments

 

Highly unlikely a lender will approve interest in advance as you may fail loan servicing tests without work. I know you have the cash in a offset to pay the interest but banks dont see it that way. A new loan (1yr fixed) likely would be declined. Worth discussion with a broker before commencing the application....Its also getting late and may not be accepted. Lender cut off dates vary between mid May and some still allow mid June.

Typically the tax withheld from redundancy will be almost totally pre-estimated BUT other issues can impact it and be unexpected
- Medicare Levy Sucharge (no insurance or overclaim of the offset)
- Div 293 tax on super contributions ($250K adding gross taxable income + super)...Can be released from the fund.
- Help debt repayment
- Extra tax on unused leave (taxed at marginal rate, no concessions)

Your tax adviser could run the numbers and advise any estimate for shortfalls. I just did one for a client last week.

Take care with super since the employer may pay a lumpy final super amount and the max $25K cap will be affected by that.