Hello fellow ozbargainers,
Looks like that our income is approaching the threshold for MLS this year. I am so thinking of selling some shares at loss to bring the assessable income below the threshold, does it work that way?
Also my understanding of the assessable income for MLS purpose is the income before any salary sacrifice or deductible super contribution? Plus the net investment gain/loss? So contributing to super doesn’t help reduce the income for MLS?
Thank you,
A
Thanks. I understand the share loss won’t offset the taxable income but would it be used for working out the assessable income, as it is “net investment gain/loss”?
Is the car expenses counted as well? Or just anything related to Salsac like Super, parking, or electronics devices (I have all).
Thanks.
The share loss will not be used for working out the assessable income. The "net investment gain/ loss" refers to a net loss on operating costs, eg when the interest charged on a margin loan exceeds your dividends received, or the interest/ rates / management fees etc on an investment property are higher than the rent received. The share loss is considered a capital loss and will not affect your taxable income.
Not sure what your car expenses relate to . I only salary sacrifice into super which is definitely added back onto taxable income when the MLS is calculated. Looking at the ATO website, your reportable fringe benefits amount is used to calculate your liability MLS. And as your employer will report the grossed-up amount, then I imagine (but ATO would be able to confirm ) that it is this amount that will be added back.
Car expenses reduce your tax payable if it’s work related. It does not reduce your income.
There comes a point in life where you want to earn more income regardless of the tax penalties as you want to get ahead in life even if it’s just bit by bit
I stand corrected, but I think work related car expenses reduce taxable income, which should reduce the MLS income as well.
Assuming no investment, no IP, nothing else just PAYG income.
MLS income = taxable income + reportable super (salsac and/or post-tax contribution then claimed as a tax deduction) + reportable fringe benefit.
Taxable income = Gross income - salsac - deductions including car, phone, deduction-claimed post-tax super contribution.
Super = either employer reportable (salsac) and/or the post-tax contribution claimed as deduction.
RFB = anything else that employer provides which is not work-related.
Then the deductions would reduce the MLS income as well? except for super since it will be added back via reportable super.
why not just buy a cheap & useless insurance and get exempt?
You need to buy such for the whole year, not just before the EOFY.
There's also a small salary window where it's cheaper to just pay the MLS instead of paying more for the cheapest private health insurance
If you sell shares at a loss it becomes a capital loss and can only be offset by capital gains. It will not reduce your income.
Would buying more shares decrease his taxable income then?
Would buying more shares decrease his taxable income then?
why would buying a non work related asset reduce someones taxable income? :/
I dunno. What if you put those shares in a trust, and then wound the trust around a foreign investment, or whatever it is rich people do.
You are correct, investment loss won't help you.
The only way I can think of is to delay your June salary to next financial year if you are on PAYG.
Mine is just a bit over, so the electronics device salsac and work-related car expenses will push it below the threshold I believe.
These readings might be useful:
Income for Medicare levy surcharge purposes
Reportable fringe benefits in employees' income information
Yes I did. Even though my interpretation of those information might not be correct but I checked my previous tax return and looks like the laptop/phone and non-super deduction (anything that you really need to generate the income that will be taxed) will help with reducing the MLS income as well. The reason super or the private-use benefit needs to be reported is because they are not required to produce the income, just a tax incentives from the government so that people save more in super or buy EV.
You're correct that personal super contributions won't reduce your assessable income for MLS purposes - it is your taxable + any salsac.
Note that selling shares at a loss triggers a capital loss which won't be set off against your taxable income, only against future capital gains, so that won't assist either.