Advisor warns of tax mistakes
THERE is a fine line between contributing too much extra money to your superannuation, and not enough, according to financial advice specialist Anthony Wright.
Tomorrow is the last day of the financial year and many people will now be scrambling to get their tax return documents ready to for the Australian Taxation Office.
Mr Wright, who is accredited by AMP Financial Planning and works for Advice Solutions in Tweed Heads, said he has seen people make the same mistakes with their tax year in, year out.
He stressed every person has different circumstances, so taking casual advice from a friend about tax is not a good idea.
“People talk and listen at barbecues, there may be a person talking about what they have done with their tax and that person says to someone else ‘Go ahead do that', but it won't work for them,” Mr Wright said.
“Every person is different and they need to talk to a planner and accountant for simple strategies that will them save money and tax.”
Mr Wright said a lot of people don't know how much to contribute to superannuation.
“You may miss out on free money from the government and you may miss out on reducing your tax if you are self-employed,” he said.
Unfortunately for many, leaving super contributions until too late is a problem.
“There is always an end of financial year rush to get tax advice,” Mr Wright said. “What I have come across is people leaving it far too late when arranging the contribution they want to put into their super prior to June 30.
“Planners and accountants are too busy this time of year and it requires a lot of time and planning to get it right.”
Mr Wright said self-employed people can benefit from contributing to super and leaving it too late is a big mistake.
But contributing too much to super can lead to paying too much tax, Mr Wright said.
“If someone has sold their business and were to contribute money to their super from the sale of their business, they may not know the rules and go ahead and do it without any advice, then get a tax liability that could have been avoided.
“Depending on the individual, the excess contribution tax can be very, very hefty.” Mr Wright said managing tax and wealth becomes more important as a person reaches the age of 50 and begins to plan for retirement.
He said his advice was general in nature and he was a financial planner who helped develop strategies to save tax, but didn't give advice on tax.