A recent Morning Star article featured Brisbane Accountants Brad Hoffman and Luke Marshall, who both work in different divisions of Marsh Tincknell’s business advisory. Brad and Luke gave their advice for how to make the most of financial year-end.

Luke Marshall, senior partner at MT Wealth, Marsh Tincknell’s Financial Planning Division, said the year-end period was an opportunity for investors to rebalance portfolios.

“For longer-term investors, it’s a good time to rebalance the portfolio based on your asset allocation strategy. If you do need to reduce your equity exposure, you might as well reduce it by removing some of the worst performing shares.”

Marshall suggested rebalancing the portfolio every six months, “usually at the end of the calendar year and end of financial year,” based on stock and asset allocation limits.

Brad Hoffman, associate principal at Virtu Super, Marsh Tincknell’s in-house Self Managed Super Specialists said it was “important to enter into any transaction not based on the taxation consequences, but whether it’s a good investment decision. However, if you’re sitting on net realised capital gains throughout the course of the financial year and certain shares have underperformed, then you could choose to realise some of those losses to offset some of the capital gains.”

5 Year-end Portfolio Strategies 

The following strategies were suggested in the article for share investors to consider before 30 June.

1. Avoid ‘wash sales’ 

If you’ve made poor investments and wish to purge them, then you can do so as part of a portfolio makeover. However, the Australian Tax Office frowns on “wash sales” which is when an investor quickly sells shares at a loss in order to claim tax benefits, and then buys back the same shares shortly after.

2. Prepaying interest on investment loans 

Look at prepaying fixed interest on an investment loan for property or shares for 12 or 24 months.This locks in the interest rate, and you can deduct the interest paid in the current financial year.

3. Self-managed super strategy review

Review self-managed super funds 6 monthly and 12 monthly, before the end of tax year, to ensure any tax benefits have been taken into account. 

4. Claim subscriptions to share market information services or publications

According to the ATO “a deduction is allowable for the costs of subscriptions to share market information services and investment journals”. The cost must be incidental and directly related to gaining or producing dividends and interest from a portfolio of shares or bonds.

5. Other claims from dividend income

You can claim other allowable expenses from dividend income, including:

·         travel costs to attend a company’s AGM

·         consultations with a broker

·         internet costs to manage a portfolio

·         franked dividends (shareholders are entitled to a credit for the amount of tax the company has already paid).