We’re in the last quarter of the financial year for 2012/13. Here are our top 5 tips to get your finances squared away before the end of the financial year.
 
Private Health Insurance Rebate
The government changed the rules on private health insurance rebate from 01 July 2012. You are now income tested on private health insurance premiums and payments to private health insurance are tested against three new income thresholds to determine if you are entitled to a rebate from the government.
This means that if you have private health insurance both of the following apply:
•    The amount of private health insurance rebate you are entitled to receive is reduced if your income is more than a certain amount.
•    The ATO will determine the amount of private health insurance rebate you are entitled to receive when you lodge your tax return.
This may result in you receiving a refund or a liability depending on how you claim your rebate.
You can claim your private health insurance rebate as either a:
•    premium reduction, which lowers the policy price charged by your insurer
•    refundable tax offset through your tax return.
If you claim too much private health insurance rebate as a premium reduction, the ATO will recover the amount as a tax liability. If you have not received your full private health insurance rebate entitlement, the ATO calculate the rebate amount you are due and refund this to you as a tax offset when they assess your tax return.
You can access more information and the form you need to lodge with your health fund at http://www.humanservices.gov.au/customer/services/medicare/australian-government-rebate-on-private-health-insurance

 Deadline for lodgement: 30 June 2013

Tax Deduction for Super Contributions
If your employment income is less than 10% of your total assessable income (for example, if you’re a business owner, self-employed or not working at all), you may be able to claim a personal deduction for your own super contributions up to $25,000.
As well as boosting your superannuation for retirement , this can be an excellent strategy to employ if your assessable income is just above a tax tier to help reduce your marginal tax rate.
For example, your assessable income is $85,000 for 2012/13. By making a super contribution of $5,000 and claiming the full amount as a deduction, you reduce your assessable income and save $1,175 in tax overall.
To ensure your deduction is valid, you must give the notice of intention to claim a tax deduction to the super fund within the correct timeframe. The notice must be given before the earlier of:
•    The lodging of the tax return
•    30 June of the next financial year
Furthermore, if you wish to start an income stream or roll out of the fund, the notice must be given to the superannuation fund before doing so, otherwise the notice is invalid.
 
Tax deductible charitable donations
By making a tax-deductible donation to a charity or non-profit organisation, you may be able to offset a capital gain made during the year or reduce assessable income. For a significant donation (greater than $20,000), compared to a one-off donation, setting up a charitable trust can be a better solution for individuals, families or businesses and generally offers long-term tax advantages. A charitable trust also provides a sustainable gift that grows over time to keep giving in perpetuity, allowing you to leave a lasting legacy for the community.
 
Income Protection
Income protection insurance cover can provide up to 75% of your salary if you are unable to work due to illness or injury. This type of insurance is considered essential if you rely on employment income to meet you and your family’s lifestyle needs. These premiums are tax-deductible and can also be pre-paid for the next 12 months, allowing you to benefit from the deduction this financial year.
Paying premiums on an annual basis has the added benefit of not incurring a premium frequency charge applicable to most insurers’ policies, reducing the cost of your cover.
 
Check your Caps
Salary sacrificing to superannuation builds your funds for retirement and does so in a tax effective manner. However, if you exceed the Concessional Contribution Cap ($25,000), there are penalties applicable and the additional tax that may be payable can negate the benefits of salary sacrificing in the first place.
Because Salary Sacrifice is a strategy that is put in place before contributions are made by your employer to your super fund and Super Guarantee contributions also count towards the Concessional Contribution Cap, ensure you check the level of contributions well before the end of the financial year so you can cancel or amend your salary sacrifice before you exceed the Concessional Contribution Cap.
Further, timing of contributions need to be considered, as employers often pay irregularly or only pay by the due date (the 28th of the month following the end of the quarter).
For example, John earns $120,000 pa base salary and often works overtime.
On his base salary, his Super Guarantee is $10,800 pa. He has been sacrificing $1,100 per month since 01 July 2013. His expected total contribution for 2012/13 is $24,000. However, in accruing overtime and earning an additional $15,000 for the year, if he continues his salary sacrifice until 30 June, he will exceed the contributions cap by $350. By notifying his employer in May (for the June contribution) of either an adjustment or cancellation of his salary sacrifice, he can avoid the excess contribution and the associated tax penalty.