Your tax-return checklist

Changes to superannuation rules and personal income tax rates from July 1 are the important issues to consider if you are doing any tax planning in the lead-up to the end of the financial year.

Superannuation fund members have until June 30 to take advantage of generous concessional contribution caps, which will be halved from the new financial year.

New personal income tax rates apply from July 1 and if taxpayers can defer income until the new financial year, they stand to make some savings.

Other recent changes taxpayers need to consider are new fringe benefits tax rules and the opportunities provided by the first home saver account.

The big change to the super system announced in this year's federal budget was the reduction in the maximum amount of concessional contributions people can put into their super account each year. The concessional contribution cap has been cut from $50,000 to $25,000 a year for people under 50 and from $100,000 to $50,000 for the over 50s. The new rules take effect on July 1.

The higher contribution cap for the over 50s lasts only until the 2011-12 financial year, after which all super fund members will have the same cap, irrespective of age.

Financial planners advise anyone in a position to take advantage of the higher caps, and whose strategy had been to accelerate their super contributions close to retirement, consider making use of the caps that will be available for the next couple of weeks.

The personal income tax changes affect a couple of thresholds and one rate. From July 1, the point at which the marginal tax rate moves from 15 per cent to 30 per cent increases from $34,000 to $35,000. Also from July 1, the marginal rate that applies to income between $80,001 and $180,000 will drop from 40 per cent to 38 per cent. The top marginal rate of 45 per cent, on income above $180,001, does not change.

A tax trainer with Kaplan Professional, Garry Payne, says: "Traditional year-end strategies of deferring income and bringing forward expenses are still applicable. Marginal tax rate reductions from July 1 can result in tax savings where income is legitimately deferred."

Deferral strategies include putting off the sale of an asset that will produce a capital gain.

The most common way for investors to bring forward expenses is to prepay interest on an investment loan and prepay deductible insurance costs.

Payne says taxpayers must pay attention to recent changes to fringe benefits tax rules when making claims for items such as laptop computers. "Laptop computers and other portable electronic devices must now be primarily used for employment purposes to qualify for an FBT exemption," he says. "Also, only one item of each type can be acquired each year. The employee is unable to claim depreciation on the equipment where the employer receives the FBT exemption."

The managing director of InfoChoice, Shaun Cornelius, says one June 30 strategy that has slipped under the radar is the first home saver account. Introduced last year, the scheme commits the Government to contribute 17 per cent on the first $5000 deposited each year over four years into an approved account, meaning account holders can qualify for up to $3400 of Government contributions.

To qualify, the customer must make personal after-tax contributions of at least $1000 a year over four financial years. Commentators have argued a big drawback is having the money on deposit for four years. Cornelius says the scheme is better than it looks.

"A deposit made on June 30 in year one would be enough to qualify for the Government contribution in that financial year. The deposit would then be maintained for two full years.

"In the fourth year it would be necessary to keep the account open [and make a deposit] for just one day, before withdrawing the funds and closing the account, to qualify for the Government contribution in that year.

"The account needs to be operated for only two years and two days to realise the full benefit of the Government contributions and tax concessions. It is a far more flexible product than most people have allowed and the lead-up to June 30 is the time to take advantage of the scheme."