The recent ChangeGPS 2021 Tax Trends Report has outlined the tax planning strategies most recommended by tax accountants that Australians can take advantage of prior to 30 June 2021.
The report analysed almost $1 billion in recommended deductions ($910,876,234) that create up to $337,212,714 in tax savings over 13,191 pieces of advice and was run on 28 May 2021. ChangeGPS believes this to be the largest data set of its kind and shows the real value of engaging and paying an accountant for tax planning advice.
Across this financial year, superannuation was one of the most popular tax planning strategies given by accountants. The ChangeGPS report revealed that making a tax-deductible superannuation contribution is the most popular strategy overall.
It was recommended 65 per cent of the time in 2020 and increased to 71 per cent so far in 2021. Accountants are allowed to advise on the tax impact of making a super contribution but should seek independent financial advice to assess the suitability for their personal position.
Furthermore, utilising carried forward unused super contributions caps is the fourth most popular strategy in 2021, featuring in 15 per cent of all advice given. It’s a big mover, up from 13th last year in just 5 per cent of advice reports, according to ChangeGPS.
Meanwhile, for many small businesses, bringing forward tax savings by paying employee super early was a popular strategy. Bringing forward employee super contributions is recommended in 21 per cent of all reports in 2020, up from 19 per cent in FY20.
The spousal super contribution tax offset eligibility which utilises contribution to superannuation on their spouse’s behalf continued to have a minimal take-up in the year, with an average recommendation (average cost) of up to $1,771.
The double contributions strategy for SMSFs also saw utilisation this financial year and was recorded as one of the new strategies given by accountants. The average recommended deduction was around $24,000 and it saved on average up to $7,121.
Funds that used deductions through giving (donations) increase via discretionary trust saw very minimal use this year, with average savings of only $588, while superannuation savings via child personal super contribution and trust distribution was one of the least popular tax deduction strategies, with an average recommendation of around $10,000 in deductions and average savings up to $2,100.
