Individuals – 2021 Year End Tax Planning Series

As we move towards the end of the 2021 financial year, it is a good idea to start considering what tax planning strategies to put in place now to minimise your tax liability. In the seventh part of this eight-part series, we will outline a number of suggestions that may assist individual taxpayers to legitimately minimise or defer their taxation exposure.

Please note these suggestions are of a general nature only and should not be relied upon without seeking specific personal advice. With 30 June fast approaching, you need to act quickly, and we encourage you to contact our office on 1300 620 345 to schedule a meeting as soon as possible to assess your options and discuss the steps you need to take.


Individual Tax Rates

As part of the 2020-21 Federal Budget, delivered 6 October 2020, the Government brought forward the second stage personal income tax cuts by two years. The new individual tax rates, that were originally proposed to take effect from 1 July 2022, will now apply retrospectively from 1 July 2020.

The changes to the Individual Tax Rates include the following:

  • an increase in the top income threshold of the 19 per cent tax bracket from $37,000 to $45,000.
  • an increase in the top income threshold of the 32.5 per cent tax bracket from $90,000 to $120,000.
Taxable Income Tax on this Income
$0 – $18,200 Nil
$18,201- $45,000 19c for each $1 over $18,200
$45,001 – $120,000 $5,092 plus 32.5c for each $1 over $45,000
$120,001 – $180,000 $29,467 plus 37c for each $1 over $120,000
Over $180,000 $51,667 plus 45c for each $1 over $180,000
Compulsory Superannuation Rate: 9.5%
Medicare Levy of 2% applies (not applicable to low income earners)

Home Office Expenses

If you are an employee and your principal place of business is not at home – that is, you have a workstation in an office elsewhere – there are three ways of calculating deductions for home office expenses:

  • the shortcut method (80 cents) (only available between 1 March 2020 to 30 June 2021)
  • the fixed rate method (52 cents)
  • the actual cost method

The shortcut method allows individuals who worked at home as well as individuals who have home-based offices, to claim a rate of 80 cents per hour for all their running expenses. If you opt to use this method, you cannot make separate claims for any additional expenses incurred while working at home.

The fixed rate method only covers the decline in value of home office furniture and furnishings, electricity, gas, and cost of repairs of your home office equipment. Using this method allows you to still claim expenses such as phone, internet, computer consumables, stationery and decline in value of equipment separately.

Using the actual expenses method, you must work out your deduction from actual costs you incur as a result of working from home.

Investment Property Depreciation

If you own a rental property and have not already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.

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